Inox Air Products Limited

INOX Air Products turns air and electricity into industrial gases: oxygen, nitrogen, argon and specialty gases. It sells them under long-term contracts and through a dense delivery network. The air is free, so the business is really about running expensive plants efficiently and keeping customers locked in. How it works Production. Air separation plants chill air to about −180°C and split it into oxygen, nitrogen and argon. Electricity is the main cost, about 22% of revenue. Delivery. The gas reaches customers in one of three ways (table below). The link between them. Big on-site plants usually produce more than the host factory needs. INOX has the exclusive right to buy that surplus and sell it through its merchant network. A plant the customer helped pay for also supplies INOX's tankers. The three businesses On-site Merchant (bulk liquid) Packaged & specialty Share of FY26 revenue 28.7% 58.6% 12.8% What it is Plant built inside the customer's factory, gas sent by pipeline Liquid gas trucked to tanks INOX owns at customer sites Cylinders, plus ultra-pure gases for electronics Customers Steel, chemicals, solar Pharma, glass, hospitals, auto Hospitals, small users, semiconductor and solar plants How it earns Fixed facility charge plus operation and maintenance fees; customer supplies the power Price per tonne, covering production and delivery Price per cylinder plus rental and refill charges Contract 15–20 years, take-or-pay Contracts and purchase orders Purchase orders Role Stable, utility-like base Main profit engine Highest value per kg, fastest-growing Revenue streams Revenue comes from four places: Gas sales, mainly oxygen (39%), nitrogen (20%) and argon (11%) Plant lease rentals on on-site plants (about 10%) Operation and maintenance fees on those plants (about 8%) Cylinder rental and other charges (about 2%) Cost structure Power is the biggest cost at about 22% of revenue. In on-site contracts the customer bears it. Freight and diesel run a 739-tanker fleet. Depreciation is high because the business is capital-heavy: about ₹7,300 crore of gross fixed assets. Labour is relatively small, at about 1,800 employees. The result is an operating EBITDA margin of about 47%, the highest among Indian peers. Why it's hard to compete with Distance limits competition. Liquid gas can only be trucked about 300 km economically, so local plant density decides who wins. INOX has 57 locations. Customers stay put. INOX owns 1,679 tanks at customer sites, and on-site contracts are 15–20 year take-or-pay deals. It leads on scale. It holds 22.4% of the market overall and 31% of merchant. It has world-class technology. Air Products (USA) owns 50% and supplies plant technology. Growth drivers More on-site plants: 4,314 tonnes per day (TPD) under construction, including Tata Steel in Odisha. More merchant capacity: 921 TPD under construction. Electronic and specialty gases: for solar and semiconductor factories, with a planned hub at Dholera. Key risks Concentration: the top 5 customers are 25.9% of revenue, and steel, pharma and auto together are 57%. Free cash flow is thin because nearly all cash goes back into new plants. Returns are falling: adjusted ROCE dropped from 30% to 24.5% as capex rises. Power costs hurt wherever they can't be passed on to customers.