INOX INDIA Rs 1200
Let’s take a closer look at Inox India Ltd – a niche, high-quality player in the cryogenic equipment space that’s quietly building a moat in a tough-to-enter industry.
Getting to Know Inox India
Started way back in 1992 by Devendra Jain, Inox India has evolved into a leading manufacturer of cryogenic tanks – think super-cooled containers used to store and transport gases like oxygen, nitrogen, hydrogen and Liquified Natural Gas (LNG). Since many gases can be dangerous, companies like Inox with years of experience and necessary regulatory approvals enjoy a strong moat.
The business is part of the broader Inox Group – Pavan Jain manages Inox Air Products, Inox India, and PVR Inox. The company remains tightly held, with the promoters owning 75%, and is now run by professional managers who have been around for over 25 years!
Where Does Inox Make Its Money?
Inox operates across four main verticals:
- Industrial Gases has moderate margin and GDP matching growth (61% of FY25 revenue) – Core segment with demand from sectors like steel, oil & gas, chemicals, and more.
- LNG having higher margin with expanding scope (19%) – Gaining traction with global orders and India’s push for LNG-powered trucks.
- Cryo Scientific Division having highest margins and chances of high growth (16%) – Supplies of highly critical equipment for nuclear and space sectors.
- Stainless Steel Kegs having lower gross margin, similar EBITDA due to low opex with supply shortage in the international market (4%) – A new vertical for beer storage – small now, but promising.
India or Global? A Bit of Both!
Inox earns about half its revenue from exports. The US is the top export market (12% of total sales), followed by Korea and Saudi Arabia. Despite trade tariffs, US demand remains strong due to a shortage of disposable cylinders – good news for Inox.
Let’s Break It Down Further
1. Industrial Gases
This segment grows steadily with the economy. But here’s where it gets interesting – India’s semiconductor boom could add a big tailwind. With ₹1.5 lakh crore of announced investments, even a sliver of this market could add 10% to Inox’s annual revenue. And guess what? Inox is pretty much the only game in town for these tanks.
2. Liquified Natural Gas (LNG)
Inox supplies everything from LNG tanks to transport trailers. Big orders have come in from the Bahamas, UK, and Adani Total. And there’s long-term potential here with LNG trucks – an alternative to diesel where EVs can’t quite cut it because of range anxiety.
3. Cryo Scientific Division (CSD)
This is Inox’s high-margin, high-tech division, serving nuclear power and space. With the government pushing nuclear energy in the recent budget, this space could heat up.
4. Stainless Steel Kegs – The Cool New Kid
Launched in September 2023, this vertical makes stainless steel beer kegs. Approvals from giants like Heineken and AB InBev are already in place. With ₹4,000 crore being invested in Indian beer capacity, this could be a strong growth area – not to mention global demand for ~1 million kegs!
What Do the Numbers Say?
In FY25, Inox posted ₹1,306 crore in revenue with EBITDA of 284 crore (22% margin) and PAT of 226 crore (17% margin). Its return ratios are excellent (~30%), and it is completely debt-free due to its high OCF/FCF to PAT ratio. As of March 2025, the order book was ₹1,356 crore, roughly matching one year’s revenue.
What Could Go Wrong?
- Valuation: At ₹1,200 per share and FY25 EPS of ₹25, it’s trading at 48x earnings – that’s steep. Even with 18-20% growth as guided by the management in Q4FY25 conference call, future returns may be muted unless there’s a surprise upside.
- Competition: Linde India may step in. While it’s currently a captive player, things could change if it decides to approach the market.
- Steel Prices: About 35–40% of costs come from steel, affecting margins on standard off the shelf products (40% contribution) though custom products (60% contribution) remain insulated.
So, Is It a Buy?
Inox India is a strong company – great management, niche business, global customers, and a solid balance sheet. But at current prices, the upside seems already priced in. Assuming a 3 year growth rate of 18-20%, implied return is only ~6% at a reasonable exit PE of 35.
If LNG trucking, semiconductors, or beer kegs scale up faster than expected, the story could get exciting. For now, investors with patience and risk appetite can consider adding on dips.
Otherwise, keep it on your radar – it’s a company worth tracking.