JM Financial has initiated coverage on INOX India with a firm BUY recommendation and a target price of Rs 1,240, citing strong growth potential driven by industrial gas infrastructure, LNG expansion, and the company's new venture into beverage kegs. INOX, the largest cryogenic equipment manufacturer in India, has consistently outperformed its peers in revenue, margin, and return metrics. Its dominant presence in high-barrier industries, combined with engineering precision and decades of manufacturing expertise, positions it for accelerated growth in emerging sectors like semiconductors, green hydrogen, and LNG trucking. With an average RoE of 30%, a 16% EPS CAGR forecast, and a current P/E multiple below historical norms, INOX presents a compelling case for long-term investors.

JM Financial Initiates Coverage with BUY: Target Set at Rs 1,240

JM Financial has launched coverage on INOX India with a confident BUY call, backed by a 37x FY27E EPS valuation. The brokerage projects a revenue CAGR of 16% through FY24–27, supported by strong tailwinds in the industrial gas and LNG markets.

Target price: Rs 1,240
Current market price: ~Rs 1,014
Upside potential: 22.3%

The valuation reflects expectations of robust free cash flow, resilient return metrics (RoE and RoCE averaging 30% and 26%, respectively), and a pipeline of growth opportunities in regulated and export-heavy verticals.

India’s Cryogenic Champion: A Market Leader 4x Larger Than Its Nearest Rival

INOX India commands nearly 60-65% of the domestic cryogenic industrial gas market, and outpaces competitors like VRV Asia Pacific and Cryolor with 4x–6x higher revenue.

With three decades of expertise, INOX’s comprehensive product line covers cryogenic tanks, LNG solutions, vacuum-insulated storage, regasification units, and EPC contracts. The company also leads the scientific cryogenics niche, supplying customized solutions for projects like ISRO and the ITER nuclear fusion program.

Expanding Horizons: LNG Trucking and Global Orders Add New Dimensions

The LNG division, contributing 28% to revenue, is witnessing exponential growth.

Key drivers include:

Recent mega orders from Adani Total Gas (11 LNG terminals).

Overseas projects in the UK, Bahamas, and Caribbean exceeding Rs 2 billion.

India’s ambitious target of 1,000 LNG fueling stations, 40 of which INOX has already secured.

INOX is also supplying LNG fuel tanks to Tata Motors, Ashok Leyland, and Volvo, eyeing India’s shift toward LNG-powered commercial fleets.

Industrial Gas Opportunity Expands with Healthcare and Semiconductors

INOX’s industrial gases vertical, accounting for 63% of FY24 revenue, is buoyed by post-pandemic demand for medical oxygen and India's aggressive push into semiconductors.

Expected industry CAPEX: Rs 1.5 trillion across Tata, Micron, and Kaynes projects.
INOX's potential share (0.1% of CAPEX): Rs 1.5 billion.

Already a supplier to Micron’s OSAT facility, INOX is poised to win large orders as it remains one of the few Indian firms capable of meeting semiconductor-grade cryogenic standards.

Beverage Kegs: A Strategic Diversification into the Global F&B Industry

INOX’s foray into NSF-certified stainless steel beverage kegs represents a bold shift from pure-play cryogenics to broader industrial applications.

Capex invested: Rs 2 billion at the Savli facility.
FY25 revenue guidance: Rs 500–600 million.
Export orders: Delivered to Belgium, USA, and Brazil.

The facility, with an initial 300,000-keg capacity, is scalable to 1 million. Clients include AB InBev, with Carlsberg and Heineken in the pipeline.

Financial Metrics Reflect Industry-Leading Strength

FY24–27E CAGR:

Revenue: 16%

EBITDA: 17%

PAT: 16%

EPS: 16%, rising from Rs 21.6 in FY24 to Rs 33.4 by FY27

Margins and return metrics:

EBITDA margin: stable at 22%+

RoE: ~30%

P/E multiple: 30.3x FY27E, currently below historical mean

Despite margin dilution from the lower-margin keg business, INOX’s mix of high-margin LNG and CSD operations ensures EBITDA resilience.

Robust Order Book and Global Expansion

INOX ended FY24 with an order book of Rs 11 billion, split evenly between exports and domestic contracts.

Key clients include: ISRO, Shell Energy, Navin Fluorine, Air Liquide, and Saint Gobain.
Export share in FY24: 56% of total revenue.
Top destinations: USA (24%), Korea (13%), Saudi Arabia (10%).

Recent wins such as the Rs 2 billion LNG terminal project in the Bahamas and the world’s largest liquid air energy storage tanks in Manchester showcase INOX’s growing global stature.

Risks and Outlook: Execution Holds the Key

Potential risks include:

Regulatory delays in new verticals like semiconductors.

Global order volatility due to geopolitical headwinds.

Continued margin pressure from the beverage kegs business.

That said, the expiry of a U.S. non-compete clause in October 2028 opens the door to a high-margin, advanced cryogenics market. JM Financial notes that this could be a multi-billion-dollar opportunity for INOX post-2028.

Verdict: Strategic Growth Meets Operational Excellence

INOX India’s differentiated strategy, export diversification, and first-mover advantage in a high-barrier industry warrant investor confidence. With a lean balance sheet, premium clientele, and scalable global operations, the company is structurally positioned for multi-year growth. JM Financial’s BUY call, pegged at Rs 1,240 per share, offers a 22% upside and captures INOX’s solid fundamentals, emerging tailwinds, and proven execution capabilities.