INOX INDIA LIMITED December 13, 2023

SMC Ranking
(2.5/5)

Issue Highlights About the company

Industry Capital Goods Incorporated in 1976, Inox India Limited manufactures and supplies
Offer for sale (Shares) 2,21,10,955 cryogenic equipment. The company's business activities comprise three
Net Offer to the Public 2,21,10,955 divisions, 1. Industrial Gas: The division designs, manufactures and installs
Issue Size (Rs. Cr.) 1386-1459 cryogenic tanks and systems for the storage, transportation and distribution
Price Band (Rs.) 627-660 of industrial gases, including green hydrogen and oxygen. 2. LNG: The
Offer Date 14-Dec-23 division develops, manufactures, supplies and installs both standard and
Close Date 18-Dec-23 engineered equipment for LNG storage, distribution, and transportation, as
Face Value 2 well as small-scale LNG infrastructure solutions for industrial, marine and
Lot Size 22 Shares automotive applications. 3. Cryo Scientific: This division offers equipment
and turnkey solutions for scientific and industrial research in the field of
cryogenic distribution with a focus on technology-intensive applications. The
Issue Composition In shares product portfolio includes standard cryogenic tanks and equipment,
Total Issue for Sale 2,21,10,955 beverage kegs, bespoke technology, equipment and solutions as well as
QIB 1,10,55,478 large-scale turnkey projects used in various industries such as industrial
NIB 33,16,643 gases, liquefied natural gas ("LNG"), green hydrogen, energy, steel, medical
Retail 77,38,834
and healthcare, chemicals and fertilisers, aviation and aerospace,
pharmaceuticals and construction. The company's major customers include
Air Liquide Global E&C Solutions India Private Limited, Caribbean LNG Inc,
Shareholding Pattern (%) 2G Energy Inc, ISRO, Hyundai Engineering and Construction Co Ltd and
Particulars Pre-issue Post -issue many others. As of September 2023, the company has exported products and
Promoters & promoters group 99.30% 75.46% services to 66 countries, including the United States, Saudi Arabia, the
QIB - 12.88%
Netherlands, Brazil, Korea, the United Arab Emirates, Australia and
NIB 0.70% 3.13%
Bangladesh. The company's manufacturing facilities are located in Kalol,
Retail 0.00% 8.53%
Kandla Special Economic Zone (Kandla SEZ) and Silvassa in the Union
Total 100.00% 100.00%
*calculated on the upper price band Territory of Dādra and Nagar Haveli. As of September 2023, the company's
order book stood at Rs. 10,36.61 crore.

Objects of the Issue

Carry out the Offer for Sale of up to 22,110,955 Equity
Strength
Shares by the Selling Shareholders; and
Leading Indian supplier and exporter of cryogenic equipment and
Achieve the benefits of listing the Equity Shares on the
solutions
Stock Exchanges. Further, the Company expects that the
proposed listing of its Equity Shares will enhance the In Fiscal 2023, it was the largest supplier of cryogenic equipment in India by
visibility and brand image as well as provide a public market
for the Equity Shares in India. The Selling Shareholders will revenues (Source:CRISIL Report, November 2023). Further, with exports to
be entitled to the entire Offer proceeds after deducting the 66 countries in it is well placed to capitalize on global opportunities in
Offer expenses and relevant taxes.
cryogenic equipment and systems as it design and manufacture its
equipment with international norms. It is also the largest exporter of cryogenic
Book Running Lead Manager
tanks from India in terms of revenue in Fiscal 2023. (Source: CRISIL Report,
Ÿ ICICI Securities Limited November 2023). The demand for cleaner fuels such as LNG and hydrogen
Ÿ Axis Capital Limited due to focus on reducing carbon emissions from conventional energy
Ÿ
sources will drive the uptake of cryogenic equipment across geographies.
Name of the registrar
Ÿ Kfin Technologies Limited Other key demand drivers are expected to include (i) the high demand for
gases from the metallurgy sector, (ii) demand from the oil and gas sector and

1
(iii) the chemical industry’s decarbonization and transition to more sustainable
processes.

Large portfolio of specialized cryogenic equipment engineered to global quality

standards

It offers comprehensive solutions across design, engineering, manufacturing and

installation of standard as well as customized cryogenic equipment and systems. Its
equipment and systems are used in industries such as energy, industrial gases, LNG
and LCNG, steel, medical and healthcare, chemicals and fertilizers, aviation and
aerospace, pharmaceuticals and construction. It has developed and commercialized
products and services spanning across the entire cryogenic value chain in industrial
gases, LNG liquefaction plants and liquid hydrogen. Its products require specialized
engineering, industry certification and customer acceptance because of the extremely
low cryogenic temperature and volatile nature of the gases that its equipment stores
and handles. In the six months ended September 30, 2023, and in Fiscal 2023, Fiscal
2022 and Fiscal 2021, its installed capacity of cryogenic tanks and related items was
1,550, 3,100, 3,100 and 2,200 Equivalent Tank Units (which are cryogenic storage
tanks of 10,000 litres), respectively, and 1.2 million, 2.4 million, 2.4 million and 1.4
million disposable cylinders, respectively.

Diversified domestic and international customer base across industry sectors

It has diversified end-industry mix with customers in industries such as energy,

industrial gases, LNG and LCNG, steel, medical and healthcare, chemicals and
fertilizers, pharmaceuticals, aviation and aerospace, pharmaceuticals and
construction, amongst others. Its major customers include, Air Liquide Global E&C
Solutions India Private Limited, All Safe Global, Baif Development Research
Foundation, CRYONiQ s.r.o., Gulf Cryo LLC, Hyundai Engineering and Construction
Co Ltd, INOX Air Product Pvt Ltd, Carbacid (CO2) Limited, Navin Flourine
International Ltd, National Refrigerants Inc, Pentrade Global LLC, Prodair Air
Products India Pvt Ltd, SK ecoengineering Co. Ltd, StemCyte India Therapeutics Pvt
Ltd, Synergy Gases ( K ) Ltd in Industrial Gas Division. Caribbean LNG Inc, 2G Energy
Inc, AGP City Gas Pvt Ltd, H-Energy Gateway Pvt. Ltd., Hoglund Gas Solutions AS,
IRM Energy Limited, Saint Gobain India Private Limited, Shell Energy India Private
Limited; Think Gas Distribution Private Limited, Ultra Gas & Energy Limited in LNG
Division and ISRO in Cryo Scientific Division. In Fiscal 2023, five of our top ten
customers and eight of our top twenty customers were repeat customers. It has also
built a strong international customer base. In the six months ended September 30,
2023, and in Fiscal 2023, Fiscal 2022 and Fiscal 2021, it exported its products and
delivered services to 66 countries.

Strong product development and engineering focus

It has an inhouse engineering team to develop new products and solutions. In the past
three fiscal years, its inhouse team has developed cryogenic containers that comply
with ISO containers standards, LNG fuel stations, LNG/LCNG fuel stations, LNG fuel
tanks, cryogenic biological storage and beverage kegs. During the last five years, it
has added new products: liquid hydrogen storage tanks, LNG dispensers, LNG fuel
tanks and aluminium trailers. Its activities are focused on developing newer
technologies, engineering new products, reducing our cost of production, simplifying

2
manufacturing processes, improving safety and reducing the environmental impact of
its manufacturing and products. With a view to further strengthen our R&D
capabilities, it is continuously looking to recruit and appoint scientists of varied
experience and expertise at its R&D facility.

Healthy financial performance to support growth

The consolidated total income has increased at a CAGR of 27.13% from Rs. 608.99
crore in Fiscal 2021 to Rs. 984.20 crore in Fiscal 2023. The consolidated total income
was Rs. 579.99 crore in the six months ended September 30, 2023. The EBIDTA on a
consolidated basis has increased at a CAGR of 21.96% from Rs. 149.70 crore in
Fiscal 2021 to Rs. 222.65 crore in Fiscal 2023. In the six months ended September 30,
2023, and in Fiscal 2023, Fiscal 2022 and Fiscal 2021, the EBITDA on a consolidated
basis was Rs. 145.74 crore, Rs. 222.65 crore, Rs. 188.63 crore and Rs. 149.70 crore,
respectively, while the EBIDTA margins on a consolidated basis in the same periods
were 25.13%, 22.62%, 23.47% and 24.58%, respectively.

Strategy

Capitalize on opportunities in LNG and hydrogen as part of the global clean

energy transition

The demand for cryogenic equipment across geographies is expected to be driven by

the increased demand for cleaner fuels such as LNG and hydrogen due to the focus
on reducing carbon emissions from conventional energy sources. In India, the
national objectives in line with the Paris Agreement are expected to increase demand
for power generation and vehicles fuelled by cleaner fuels like LNG, LCNG and
hydrogen. The company is well positioned to capture the global market growth, and it
intends to focus its efforts on the small-scale LNG segment. In the LNG tank segment,
it has supplied over 60% of the tanks in both the stationary tank segment which
includes all LNG applications including LCNG stations and trailer mounted mobile
LNG tanks in India which have a valid PESO license as of May 4, 2022. It is a product
development and engineering centric company and it intends to focus its efforts on
innovation in complex industry environments where its value-addition is greatest in
areas like hydrogen storage, transportation and distribution to address the need for
large scale movements of liquid hydrogen. Its engineering team has been developing
cryogenic equipment for hydrogen.

Capture the full value-chain across our product lines

It is looking to gain market leadership positions across the entire value-chain of its
product lines, and it intends to continue to expand its offerings in each segment to
provide its customers with end-to-end solutions. By expanding the product portfolio to
include a fully integrated product presence in each major segment, it expects to
capture market share. In this regard, it aims to offer customers equipment for storage
for transportation, for distribution and, finally, equipment for the end-use by customer.

Expanding its standard cryogenic and non-cryogenic equipment business into

international markets

Its standard equipment business includes storage tanks, transport tanks, disposable
cylinders, microbulk tanks, beverage kegs and other equipment engineered to

3
industry standards. It is looking to expand its geographic reach for its standard
equipment that it can produce at prices which are competitive in the international
market. In addition, it is considering expanding its non-cryogenic equipment business
to include the manufacture of stainless-steel metal containers. It is also looking to
distribute internationally its mass produced cryobiological containers fabricated from
aluminium, and it is developing regional distributors to support retail sale of such
products. It is looking for expansion in North America, South America, Europe, Africa,
Korea and Japan. It is also ramping up its current business in the Middle East,
Southeast Asia, India and the SAARC region. It intends to achieve this expansion by
having dedicated sales and marketing teams whose primary focus will be on business
development in international markets, particularly, in its focus geographies. It is also
look for new partners in its focus markets to establish a local presence.

Expanding its large turnkey project business

It aims to change its revenue mix over time towards large turnkey margin accretive
projects. The large turnkey projects offer better margins because of the limited
competition for these projects, the economies offered by their scale and the large
engineering and customization elements to these types of projects. An example of the
type of its large turnkey projects is its recent mini-LNG terminal in Scotland. It
manufactured and supplied the mini-LNG terminal on a turnkey supply basis in Fiscal
2019 which includes two 1,000 cubic meter vacuum, insulated storage tanks, a ship
bunkering station, 300 meters of vacuum jacketed piping, a trailer loading station and
a vaporization system. The terminal was designed according to EN1473, British
standards for installation and equipment for LNG. All major critical equipment installed
in the mini-LNG terminal was designed and manufactured at its Kandla manufacturing
facility. This mini-LNG terminal was commissioned in 2021.

Continue to improve operational efficiency and productivity

In the six months ended September 30, 2023 and the past three fiscal years, It has
been improving its operational efficiency at its Kalol and Kandla SEZ facilities with a
focus on improving productivity and reducing operational expenses including labour
costs, power expenses and other expenses including testing, repair, insurance,
security and other operational expenses. It intends to continue enhancing its
operational efficiencies and productivity and increasing its economies of scale to
better absorb its fixed costs and reduce its other operating expenses.

Growth through strategic acquisitions and alliances

It continues to expand its manufacturing capacity at its facilities as demand requires. It

is evaluating establishing a new facility to manufacture standard equipment including
storage tanks, transport tanks, microbulk tank and stainless-steel metal containers for
variety of application in accordance with its strategy to expand its standard equipment
mentioned above. It is look for strategic acquisition targets in India and internationally
to expand its regional reach, product development and manufacturing assets. It is also
looking for opportunities to acquire businesses to add business segments where it is
currently not present.

Risk factors

Ø An increase in raw material costs, or other input costs.

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Ø Company does not own the name “INOX”, termination of the Name License
Agreement may adversely impact its business.

Ø Exports constituted 62.18% of its revenue, tariffs and trade barriers and
international sanctions could adversely affect our business.

Ø The markets it serves are subject to cyclical demand and vulnerable to economic
downturn.

PEER COMPARISON

*There are no listed companies in India that engage in a business similar to the
Company.

Valuation

Considering the P/E valuation on the upper price band of Rs.660, EPS and P/E based
on TTM are Rs.19.02 and 34.70 multiple respectively and at a lower price band of Rs.
627, P/E multiple is 32.97. Looking at the P/B ratio on the upper price band of Rs.660,
book value and P/B are Rs. 61.06 and 10.81 multiple respectively and at a lower
price band of Rs. 627 P/B multiple is 10.27. No change in pre and post issue EPS and
Book Value as the company is not making fresh issue of capital.

Industry overview

The global cryogenic equipment demand is projected to grow at CAGR of 6.9% from
calendar year 2023 to calendar year 2028, according to the CRISIL Report. Demand
for cleaner fuels, such as LNG and hydrogen, as a result of the aim to reduce carbon
emissions from conventional energy sources, will drive the uptake of cryogenic
equipment across geographies. Additionally, the increase in industrialization in
developing nations in Asia Pacific is expected to boost demand for industrial gases in
segment such as electronics, space and satellite and, in turn, increase demand for
cryogenic equipment. Major cryogenic equipment includes tanks, valves, vaporizers
and pumps. In calendar year 2022, tanks accounted for 54% of the total global
cryogenic equipment demand, amounting to approximately US$6,175 million,
according to the CRISIL Report. Application-wise, ASUs form a major share of
demand accounting for approximately 62-64% of the total application for cryogenic
tanks in calendar year 2022. Major end-user industries that utilize cryogenic
equipment are metallurgy, energy & power, chemical, electronics, transportation, and
others.

Outlook

The demand for cryogenic equipment across geographies is expected to be driven by

the increased demand for cleaner fuels such as LNG and hydrogen due to the focus
on reducing carbon emissions from conventional energy sources. The company plans
to improve its product mix by entering into large turnkey margin accretive projects. It
plan to gain leadership position across value chain and expand its capacity and entry
into new geography indicates future growth visibility. A long term investor may opt the
issue.

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An Indicative timetable in respect of the Issue is set out below:

EVENT INDICATIVE DATE

(On or about)
IPO Open Date Thursday, December 14, 2023
IPO Close Date Monday, December 18, 2023
Basis of Allotment Tuesday, December 19, 2023
Initiation of Refunds Wednesday, December 20, 2023
Credit of Shares to Demat Wednesday, December 20, 2023
Listing Date Thursday, December 21, 2023

Annexure
Consolidated Financials
Profit & Loss Rs. in Cr.
Particulars Period ended Period ended Period ended
30-Sep-23 (6 Months) 31-Mar-23 (12 Months) 31-Mar-22 (12 Months)

Revenue from operations 564.61 965.90 782.71

Total expenditure 434.26 761.55 615.08

Operating Profit 130.36 204.35 167.63

OPM% 23.09 21.16 21.42

Other Income 15.38 18.30 21.00

PBDIT 145.74 222.65 188.63

Depreciation 7.72 13.92 12.10

PBIT 138.02 208.73 176.53

Interest 1.84 3.69 2.32

Profit/(Loss) before Tax 136.17 205.05 174.21

Tax 32.84 52.34 43.71

PAT 103.34 152.71 130.50

Balance sheet is on next page

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Balance Sheet Rs. in Cr.
Particulars As on 30-Sep-23 As on 31-Mar-23 As on 31-Mar-22

Non-current assets

Property, plant and equipment 213.98 163.62 133.19

Capital work-in-progress 5.63 0.22 1.86

intangible assets 5.70 0.87 0.55

Financial Assets

Investments 0.24 0.21 0.24

Other Financial Assets 6.00 2.03 2.28

Non Current Assets held for sale 10.67 10.49 10.27

Other Non-Current Assets 20.05 7.95 5.52

Total non-current assets 262.27 185.38 153.91

Current assets

Inventories 406.86 412.78 322.52

Financial Assets

Investment 237.54 248.72 311.49

Trade Receivables 154.99 142.90 78.11

Cash and Cash Equivalents 15.53 13.69 1.19

Bank Balances other than cash and 7.77 47.99 7.63

cash equivalents as above

Other Financial Assets 21.60 61.92 3.91

Current Tax Assets ( Net) 2.81 2.60 1.32

Other Current Assets 46.43 32.39 16.68

Total current assets 893.54 962.98 742.84

Total Assets 1155.81 1148.36 896.75

Non-current liabilities

Financial liabilities

Other Non-Current Liabilities 2.18 1.55 1.29

Lease Liabilities 9.23 7.49 8.43

Deferred Tax Liabilities 9.98 8.33 7.67

Provisions 5.49 4.52 4.14

Total non-current liabilities 26.88 21.89 21.54

Current liabilities

Financial Liabilities

Borrowings 31.03 0.00 43.38

Lease Liabilities 2.43 1.50 2.73

Trades Payable - MSME 7.82 11.19 1.52

Trade Payables - other than MSME 58.36 53.57 38.53

Other financial Liabilities 108.48 62.04 40.45

Other current liabilities 322.29 413.86 217.55

Provisions 38.60 33.31 26.73

Current tax Liabilities (Net) 5.68 1.54 2.04

Total current liabilities 574.69 577.00 372.93

Total 601.57 598.89 394.47

Net worth represented by:

Equity Share Capital 18.152 18.152 18.152

Other equity 536.09 531.32 484.13

Net Worth 554.24 549.48 502.28

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RANKING METHODOLOGY

WEAK

NEUTRAL

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GOOD

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