Image Source: Economic Times
In a bold call that’s turning heads in the smallcap space, Motilal Oswal has recommended Ellenbarrie Industrial Gases Ltd as a top buy, projecting a potential upside of up to 55 percent. The brokerage has set a bull-case target price of ₹836, compared to the current market price of ₹553.45 as of September 9, 2025. With a market capitalization of ₹7,800 crore, Ellenbarrie is emerging as a key player in the industrial, medical, and specialty gases segment—an industry poised for robust expansion.
The recommendation is backed by strong fundamentals, aggressive capacity expansion, and a strategic pivot toward high-margin segments like high-purity gases for electronics. For investors seeking long-term value in niche industrials, Ellenbarrie offers a compelling opportunity.
Key Highlights from Motilal Oswal’s Investment Thesis
Base target price: ₹680, implying 26% upside; Bull-case target: ₹836, implying 55% upside
Market cap: ₹7,800 crore; current share price: ₹553.45
Sector: Industrial, medical, and specialty gases
Revenue CAGR forecast: 39% from FY25 to FY28
EBITDA CAGR forecast: 49%; PAT CAGR forecast: 52%
EBITDA margin expected to expand by 990 basis points to 45% by FY28
Why Ellenbarrie Is in Focus
Strong Business Model with Entry Barriers Ellenbarrie operates in a high-entry-barrier industry, supported by long-term pipeline contracts and essential industrial applications. This ensures stable revenue streams and strong customer retention, particularly in sectors like healthcare, manufacturing, and energy.
Favorable Industry Growth The Indian industrial gas market is projected to grow at a CAGR of 7.5 percent, from USD 1.3 billion in 2024 to USD 1.75 billion by 2028. Ellenbarrie is well-positioned to capitalize on this expansion, especially with its diversified product portfolio and regional presence.
Capacity Expansion and Operational Leverage The company has ramped up its production capacity 4.5 times between FY23 and FY25 to 3,870 tonnes per day (TPD), with plans to scale further to 4,630 TPD by FY27. This expansion is expected to drive volume growth and improve operating efficiency.
Entry into High-Purity Gases Ellenbarrie is targeting the high-purity gas segment, particularly for the electronics industry. This niche offers higher margins and growing demand, making it a strategic growth lever for the company.
Financial Performance Outlook Motilal Oswal projects a 39 percent CAGR in revenue, 49 percent in EBITDA, and 52 percent in PAT from FY25 to FY28. These forecasts are underpinned by capacity ramp-up, product diversification, and improved operating metrics.
Margin Expansion and Product Mix EBITDA margins are expected to rise from current levels to 45 percent by FY28, driven by better realizations, a shift toward high-margin products like argon and high-purity gases, and green energy initiatives.
Strategic Geographic Expansion Ellenbarrie is focusing its growth in key industrial clusters, allowing proximity to customers, lower logistics costs, and better asset utilization. This regional strategy enhances scalability and customer service.
Conclusion
Motilal Oswal’s bullish stance on Ellenbarrie Industrial Gases Ltd reflects confidence in the company’s ability to deliver strong financial performance, capitalize on industry tailwinds, and execute a focused growth strategy. With a projected upside of 55 percent in its bull-case scenario, Ellenbarrie stands out as a promising smallcap pick for investors seeking exposure to India’s industrial transformation. As the company expands its footprint and product offerings, it could become a cornerstone in portfolios built for long-term value.
Sources: Trade Brains
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