Inox India Ltd - Cold Precision, Hot Opportunity | Initiating Coverage Report

We initiate coverage on Inox India with a Buy rating and a Target Price of INR 1,500. Inox’s deep cryogenic expertise, global certifications, and integrated operations underpin its strong execution capabilities while ensuring healthy margins. With market leadership in cryogenic tanks in India, and high-entry barrier, the company is increasingly winning orders. It is well-positioned to capture the latent growth potential in the LNG infrastructure and cryo-scientific applications globally. Its proactive involvement in clean energy and advanced research projects highlights its technical readiness and strategic foresight. Backed by a visionary leadership, a net cash balance sheet, and prudent capital allocation (36% ROIC versus 11.9% WACC), Inox is well-equipped for scalable, low-risk, self-funded growth.

Strong fundamentals backed by strong engineering capabilities:

Inox India’s deep cryogenic expertise, global certifications, and high-entry barrier has entailed strong customer relationship and retention. Its integrated model ensures cost efficiency, healthy margins, and faster execution. With leadership in India’s cryogenic tank market and growing EPC wins in LNG and scientific segments, the company is well-placed to benefit from rising clean energy and gas infrastructure investments globally. Strong order book visibility and diversification across segments support our FY25–28E revenue/PAT CAGR estimate of 18-19%. Order inflows may remain lumpy due to significant project-based orders; and hence needs to be lensed through on yearly basis.

Secular tailwinds and TAM expansion through futuristic projects to drive growth:

Inox India is well-positioned to capitalize on rising demand across LNG, semiconductors, healthcare, medical cryogenics, alongside potential from scientific projects. Secular trends like decarbonization and advanced manufacturing provide long-term tailwinds supporting TAM expansion. A policy push on the LNG front from the Indian government may further strengthen its multi-year growth visibility.

Strong governance and visionary leadership:

Inox India’s lean and agile management demonstrates strategic foresight and financial discipline, reflected in its net cash position, efficient capital allocation, and tight working capital control. Early moves into LNG and hydrogen systems, and participation in scientific projects showcase proactive leadership. Backed by a consistent 21%+ EBITDA margin and strong ROCE, the company’s execution strength reinforces its governance standards, operational excellence, and ability to create long-term value in the fast-evolving clean energy landscape.

Valuation and view:

We forecast Inox India to deliver a revenue/EBITDA/PAT CAGR of 18%/18%/19% over FY25–28E, driven by steady industrial gas demand and accelerating LNG-led energy transition projects. Supported by strong cryogenic expertise, a net cash balance sheet, and self-funded growth, we see low risk scalability. Valued Inox at 40x P/E and 30x EV/EBITDA on June 2027E to arrive at a Target Price of INR 1,500 (by far the highest on the street). Our three-stage DCF valuation implies limited downside. 

Key risks:

Sharp increase in LNG prices leading to delayed LNG adoption, delay in new cryo-scientific projects.

Rating: BUY
CMP: INR 1,250
Target Price: INR 1,500
Upside: 20%    

Click to download the full Inox India Ltd. IC Report

Analyst: 

• Mohit Surana - Senior Research Analyst, Institutional Equities (NISM-202300189881)
• Mohd Haris - Research Associate, Institutional Equities (NISM-202400161268)

Company website: https://www.inoxcva.com/

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