Inox India (InoxCVA), an Inox
Group company, offers solutions across design, engineering, manufacturing and
installation of equipment and systems for cryogenic conditions with over 30
years of experience. Its offering includes standard cryogenic tanks and
equipment, beverage kegs, bespoke technology, equipment, and solutions as well
as large turnkey projects which are used in diverse industries such as
industrial gases, liquified natural gas (LNG), green hydrogen, energy, steel,
medical and healthcare, chemicals and fertilizers, aviation and aerospace,
pharmaceuticals, and construction. In addition, it also into manufacture of a
range of cryogenic equipment utilized in global scientific research projects.
Cryogenic engineering is
specialized due to ultra-low temperatures where permanent gases such as oxygen
and nitrogen are in liquid form. Thus,
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. Due to its
engineering expertise, quality product offering and customer service, the company
has developed a brand, InoxCVA, in the cryogenic equipment industry.
The company exports its products
and services to 66 countries including some key geographies such as United
States, Saudi Arabia, the Netherlands, Brazil, Korea, United Arab Emirates,
Australia, and Bangladesh. Exports accounted for 45.83% (USA 15.89%, Norway
3.46%, Saudi Arabia 2.85%, Japan 2.53%, others 21.11%) and 62.18% of revenue
for FY2023 and H1FY2024, respectively.
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 is well positioned
to capture this global market growth with its in-house technology as well as its
LNG product range that includes the entire value chain.
In hydrogen, the engineering
teams are developing products and systems in complex industry environments like
hydrogen storage, transportation, and distribution to address the need for
large scale movements of liquid hydrogen.
It is the first Indian company
to manufacture a trailer mounted hydrogen transport tank, which was designed
jointly with the Indian Space Research Organisation (ISRO). It produced and shipped a 238kl liquid
hydrogen storage tank for a liquid hydrogen plant in South Korea. It recently
produced and shipped four 311kl liquid hydrogen storage tanks for another
customer in South Korea for the construction of three liquid hydrogen plants.
The business operations of the
company comprise three divisions:Industrial Gas, LNG, and Cyro Scientific. Of the FY2023 revenue from operations, about
70.88% came from industrial gases, 24.89% from LNG, and 4.23% from cryoscientific.
In H1FY2024, it was 64%, 30.53% and 5.47%, respectively.
The Industrial Gas division
manufactures, supplies and installs vacuum insulated cryogenic tanks and
systems for storage, transportation, and distribution of industrial gases like
such as green hydrogen, oxygen, nitrogen, argon, carbon dioxide (CO2), hydrogen
and provides after-sales services. The company designs and manufactures
customized cryogenic storage tanks and systems for its customers’ requirements
as well as standard storage tanks in accordance with industry standards. Its storage tank offerings include stationery
storage tanks from 1,000 litre to one million litre capacity, portable storage
tanks from 1 litre to 1,000 litre capacity, and transport tanks and
tankers/trailers up to 60,000 litre capacity. Its product line also includes
vaporizers of various types and skid mounted piping skids for pumping and
regasification. It also provides engineering, procurement, and construction
(EPC) services for cryogenic solutions including bulk storage and
regasification equipment, typically associated with petrochemical or steel
projects. The company currently manufactures beverage kegs using the NSF-certified
stainless-steel material and is implementing the project by entering technology
and marketing alliances with international industry players.
The LNG division manufactures,
supplies, and installs standard and engineered equipment for LNG/LCNG storage,
distribution, and transportation as well as small-scale LNG infrastructure
solutions suitable for industrial, marine, and automotive applications. LNG division offerings include static storage
tanks up to one million litres capacity, transport trailers, LNG satellite
stations for industrial users, marine fuel tanks, LNG and LCNG fuel stations
and LNG vehicle fuel tanks. 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 also offers
operation and maintenance for its LNG solutions.
The Cryo Scientificdivision
provides equipment for technology intensive applications and turnkey solutions
for scientific and industrial research involving cryogenic distribution. Its
activities are focused on customized cryogenic storage and distribution systems
for space research, cryogenic fuel filling systems for launch pads, space
simulation chambers; vacuum jacketed piping and cryostat for magnetic resonance
imaging (MRI) magnets. The company is
one of the few Indian companies in the International Thermonuclear
Experimental Reactor (ITER) project, which is an international nuclear fusion
research and engineering megaproject.
Large turnkey projects (ticket
size of over Rs 5 crore) accounted for 28.68% and 45.77% of the revenue from
operations in FY2023 and H1FY2024, respectively.
The company has a diversified
customer base across industry sectors and geographies. And it provides its
cryogenic storage, distribution and transportation equipment and systems to
corporate and government customers. The company derived 4.70% and 13.02% of its
revenue from operations in H1FY2024 and FY2023 from Government customers. It has
a 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. Further, it has provided equipment and systems to
over 1,201 domestic customers and over 228 international customers across its
three divisions during the 2021-23 period. Revenue from repeat customers
accounted for 48.63% in FY2023 (51.24% in FY2022) of the revenue from
operations. Further, the top 10/20 customers accounted for 46.52%/60.55% of the
revenue from operations in FY2023 with the largest customer accounting for
11.56%.
It has three manufacturing
facilities located at (i) Kalol in Gujarat, (ii) the Kandla Special Economic
Zone (Kandla SEZ) in Gujarat, and (iii) Silvassa in the Union Territory of
Dadra and Nagar Haveli. The installed capacity of cryogenic tanks (and related
items) was 3,100 Equivalent Tank Units (which are cryogenic storage tanks of
10,000 litres) and disposable cylinders were2.4 million numbers in FY2023. The capacity utilization of cryogenic tanks
and disposable cylinders in FY2023 stood at 70.06% and 83.23%, respectively.
The issue and object
The current initial public offer
is only an Offer for Sale of up to 22110955 equity shares. The OFS comprisesthe
promoters’21637355 equity shares [ Siddharth Jain 10437355 equity shares, Pavan
Kumar Jain 5000000 equity shares, Nayantara Jain 5000000 equity shares and
Ishita Jain 1200000 equity shares]; promoter group’s(classified as OSS) 420000
equity shares [ Manju Jain 230000 equity shares, Latha Rungta 190000 equity
shares], and other selling shareholders’
53600 equity shares [Bharti Shah 13400 equity shares, Kumud Gangawal 13400
equity shares, Suman Ajmera 13400 equity shares and Rajni Mohatta 13400 equity
shares]. Post-issue, Manju Jain will and Latha Rungta will hold 0.76% and 0.63%
stake, and Bharti Shah, Kumud Gangawal, Suman Ajmera and Rajni Mohatta will hold
0.04% stake each.
The object of the issue is to
achieve the benefits of listing the equity shares on the Stock Exchanges.
Strengths
Growing demand for cleaner fuels
such as LNG and hydrogen due to focus on reducing carbon emissions from
conventional energy sources to drive demand for cryogenic equipment across
geographies.
Leading player in cryogenic
equipment industry, with a reputed brand name, InoxCVA. Indian supplier and
exporter of cryogenic equipment and solutions. By revenue, the company was the
largest supplier of cryogenic equipment in India as well as the largest
exporter of cryogenic tanks from India in FY2023.
The wide range of cryogenic
equipment spans the entire cryogenic value chain in focus sectors as well as
customized equipment (and systems), with investments in product development and
engineering.
The order book (unexecuted
portions of existing contracts) end of September 30, 2023, stood at Rs 1036.609
crore, which works-out to about 0.99 times of its sales for TTM period ended
September 2023. Of the order book, 52.8%
are for the Industrial Gas division, 25.2% for the LNG division, and 22% for
the Cryo Scientific division.
The company has a diversified
customer base across industry sectors and geographies.Revenue from repeat
customers accounted for 48.63% in FY2023 (51.24% in FY2022) of the revenue from
operations.
Weakness
The Top 1/10/20 customers
accounted for 11.56%/46.52%/60.55% of the revenue from operations in FY2023 and,
thus, a significant client concentration. Cancellation by customers or delay or
reduction in their orders could have a material adverse effect on the business
of the company.
The company does not own the
name Inox but is permitted to use the same under license agreement by the
promoters on annual royalty payment.
Exports may hit due to tariffs
and trade barriers and international sanctions.
Certain members of the Promoter
Group have not consented to the inclusion of, nor have they provided,
information or any confirmations or undertakings pertaining to themselves,
which are required to be disclosed in relation to the Promoter Group under the
SEBI ICDR Regulations in the RHP.
Disposable cylinders and
Cryoseal as products have cyclical demand. The company is also affected by the Industrial
Gas industry capex cycles.
Contingent liability as of end
September 30, 2023, stood at Rs 169.717 crore, which is 16.3% of the sales for
the TTM period ended September 2023.
Valuation
Consolidated re-stated sales of
the company for the fiscal ended March 2023 (FY 2023), were up 23% to Rs 965.90
crore. With the operating profit margin contracting by a marginal 20 basis
points (bps) to 21.2%, the operating profit was up 22% to Rs 204.35 crore.
Eventually, the PAT was up 24% to Rs 152.71 crore.
For the TTM period ended September
2023, sales were Rs 1043.72 crore and PAT was Rs 172.63 crore. The EPS for FY2023
was Rs 16.8. The EPS for TTM period ended September 2023 was Rs 19 and the P/E works
out to 34.7 times. ThePrice/BV works
out to 10.8 times.
There are no comparable listed peers
with a similar line of business. Everest Kanto Cylinders quotes at a P/E of 17.4
times its consolidated EPS for TTM ended September 2023.
INOX India: Issue Highlights
|
|
Fresh Issue (in Equity Share nos.)
|
0
|
Offer for sale (in equity share nos.)
|
22110955
|
Price band (Rs.)
|
|
Upper
|
660
|
Lower
|
627
|
Post-issue equity (Rs crore)
|
18.15
|
Post-issue promoter (including promoter group)
stake (%)
|
75.00
|
Minimum Bid (in nos.)
|
22
|
Issue Open Date
|
14-12-2023
|
Issue Close Date
|
18-12-2023
|
Listing
|
BSE, NSE
|
Rating
|
48/100
|
INOX India:
Re-stated Consolidated Financials
|
|
|
|
|
|
|
|
2103 (12)
|
2203 (12)
|
2303 (12)
|
2209 (6)
|
2309 (6)
|
|
Sales
|
593.80
|
782.71
|
965.90
|
486.80
|
564.61
|
|
OPM (%)
|
22.7
|
21.4
|
21.2
|
23.0
|
23.1
|
|
OP
|
134.50
|
167.63
|
204.35
|
112.04
|
130.36
|
|
Other income
|
15.20
|
21.00
|
18.30
|
7.84
|
15.38
|
|
PBIDT
|
149.70
|
188.63
|
222.65
|
119.88
|
145.74
|
|
Interest
|
6.86
|
2.32
|
3.69
|
1.03
|
1.84
|
|
PBDT
|
142.84
|
186.31
|
218.97
|
118.85
|
143.90
|
|
Depreciation
|
11.78
|
12.10
|
13.92
|
6.81
|
7.72
|
|
PBT
|
131.07
|
174.21
|
205.05
|
112.04
|
136.17
|
|
EO Exp
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
|
PBT after EO
|
131.07
|
174.21
|
205.05
|
112.04
|
136.17
|
|
Tax
|
34.96
|
43.71
|
52.34
|
28.62
|
32.84
|
|
PAT
|
96.11
|
130.50
|
152.71
|
83.42
|
103.34
|
|
Share of Profit from Associates
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
|
Minority Interest
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
|
Net profit
|
96.11
|
130.50
|
152.71
|
83.42
|
103.34
|
|
EPS (Rs)*
|
10.6
|
14.4
|
16.8
|
18.4
|
22.8
|
|
* on post IPO fully dillutedequity of Rs 18.15 crore. Face Value: Rs 2
|
|
EPS is calculated after excluding EO and
relevant tax
|
|
|
Figures in Rs crore
|
|
|
|
|
|
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|
Source: Capitaline Corporate database
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