Continuing their upward trend for the third consecutive trading session, shares of Linde India zoomed 7% to hit a new all-time high of ₹6,165 apiece in early trade on Wednesday. This strong uptick in shares came after the company received a ‘Letter of Acceptance’ from Indian Oil Corporation Limited (IOCL).
This LoA is for the setting up of an Air Separation Unit (ASU) on a site licensed by IOCL within its Panipat Refinery Complex for the production and supply of instrument air, plant air, and cryogenic nitrogen to the IOCL Panipat Refinery Expansion Project (P25).
"On completion of the construction and the performance test of the ASU, Linde India will enter into requisite agreements with IOCL for operating and maintaining the facility for a period of 20 years from the first delivery date. Linde India expects to fund the capital expenditure by its own funds and internal accruals," the company said in a regulatory filing.
Linde India is a subsidiary of Linde plc, a global industrial gases and engineering company. Linde India specialises in the production and distribution of industrial gases such as oxygen, nitrogen, argon, hydrogen, and other specialty gases. These gases are used in various industries, including manufacturing, healthcare, electronics, chemicals, food and beverage, metallurgy, and more.
The company's shares have exhibited remarkable performance over the past three years, offering substantial returns to investors. From their March 2020 lows of ₹401 apiece, the shares have surged to their current market value of ₹6,008, translating to an impressive gain of nearly 1400%. Furthermore, the shares have demonstrated a positive trajectory in seven out of the last eight calendar years.
At its latest Annual General Meeting (AGM), the company highlighted that gas demand in the steel sector is likely to be influenced by consolidation, productivity enhancements, and expansion plans among major players like SAIL, Tata Steel, and Vedanta.
Anticipating a substantial expansion, Linde India pointed out that the Indian auto industry is projected to reach around ₹24 trillion by the year 2026. It emphasised the persistent strength in demand for Special Purpose Chemicals (SPC) and Argon.
The company foresees considerable growth in SPC products such as ammonia, silane, and nitrous oxide, while also anticipating an uptick in nitrogen opportunities through initiatives like LIN/plant sale and on-site solutions. Furthermore, Linde India predicts steady growth stemming from the healthcare sector.
For Q1FY24, the company reported a 23% improvement in consolidated operational revenue to ₹721 crore. The revenue from gases, related products, and services surged to ₹484 crore, an increase of 20% YoY, while the revenue from project engineering came in at ₹294 crore in Q1FY24 from ₹196 crore in the same period of last year. The consolidated net profit for Q1 FY24 stood at ₹100 crore.
02 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
