1. 🧠 At a Glance
Linde India is India’s largest industrial gases company and a quiet monopoly in sectors like steel, pharma, and chemicals. Despite flat sales and boring growth, it’s built an OPM of 35% and remains debt-free. But with a P/E of 126 and low 5Y revenue CAGR of just 7%, the question is: How long can this compressed valuation stay inflated?
2. 🧲 Introduction — The Most Boring Multibagger You’ve Never Noticed
While everyone else chased PSU turnarounds, SME IPOs, and tech darlings, Linde India just chilled. Literally.
Because their core business is cold, compressed, cryogenic, and 100% boring.
But boring pays.
From ₹1,000 in 2018 to ₹9,300 in 2024, Linde silently became one of India’s most expensive stocks. And now that it’s back to ₹6,600 — investors are asking: is this a healthy pullback or has the helium finally leaked?
3. 🏭 Business Model — WTF Do They Even Do?
Linde India runs on three cylinders:
- 🧪 Gas & Related Products (~85% of revenue):
- Pipeline gas supply to industrial giants — think steel, chemicals, pharma
- Bulk cryogenic gas to factories via tankers
- Cylinders for smaller players in manufacturing, hospitals, etc.
- 🏥 Medical Gases (Healthcare):
- Medical oxygen, nitrous oxide, synthetic air
- Supplied to hospitals, pharma plants, and medical equipment suppliers
- In COVID years, this segment saved lives and margins
- 🛠 Project Engineering Division (PED):
- Turnkey setup of air separation units (ASUs)
- End-to-end design + install of gas plants
- High-ticket B2B orders with long gestation, but sweet margins
And their real edge?
🧪 Parent support from Linde PLC (via BOC UK) means:
- Proprietary tech
- Access to global IP
- Brand trust with Indian steel/pharma clients
4. 📊 Financials — Profits on Steroids, Growth on Sedatives
Revenue (FY25): ₹2,485 Cr (Down ~10% YoY)
PAT (FY25): ₹448 Cr (Flat YoY)
OPM: 35% (Steadily rising, was 25% just 2 years ago)
ROE: 12.4% | ROCE: 17%
EPS (TTM): ₹52.5
Dividend Payout: ~24% (Used to be stingier)
🔎 What’s weird?
- Despite falling sales (COVID hangover + weak industrial capex), margins are exploding
- Revenue has barely grown in 5 years: ₹2,112 Cr (FY21) → ₹2,485 Cr (FY25) = CAGR ~4%
- But PAT jumped from ₹514 Cr → ₹448 Cr in a high base year, with minimal debt
🧠 Linde is now in profit conservation mode, not growth hunger mode.
5. 💸 Valuation — Is It Cheap, Meh, or Crack?
Current P/E: 126x
P/B: ~15x
Market Cap: ₹56,000 Cr
Book Value: ₹443
🧮 Fair Value Range:
Let’s assume two ways to look at it:
- Normal OPM Business (25%):
EPS at 25% margin = ₹37
P/E 40x (premium industrial gas company) → ₹1,480 FV - Premium Monopoly (30–35% margin):
EPS ~₹52–₹55
P/E 50x = ₹2,600–2,800 (realistic fair value)
🎯 EduInvesting FV Range = ₹1,480 – ₹2,800
Current price? ₹6,600.
So… you’re either paying for future innovation or stockholder Stockholm syndrome.
6. 🍿 What’s Cooking — News, Triggers, Drama
- ✅ SEBI Investigation ongoing — related party transactions (minor tail-risk)
- ✅ Record dividend declared (120% of FV)
- ✅ Re-appointment of MD — continuation of stable leadership
- 🚫 No capex fireworks planned — company is debt-free but not deploying growth capex either
- ⚠️ Project Engineering slowdown due to lower industrial capex
Unless a green hydrogen or semiconductor gigafactory pops up and needs 10 ASUs… don’t expect sales to moon.
7. 🏗️ Balance Sheet — How Much Debt, How Many Dreams?
- Debt: ₹42 Cr (negligible)
- Reserves: ₹3,694 Cr (💰 hoarding level)
- Fixed Assets: ₹1,925 Cr
- CWIP: ₹975 Cr (some buildout coming…)
- Total Assets: ₹5,110 Cr
🔐 Linde is sitting on massive reserves but is under-leveraged in every sense. No debt = low risk = low returns too.
8. 💵 Cash Flow — Sab Number Game Hai
- Operating Cash Flow (FY25): ₹584 Cr
- Investing Cash Flow: -₹1,305 Cr
- Free Cash Flow: Negative (due to CWIP)
- Financing CF: -₹112 Cr
📉 FCF dipped due to one-time capex spike — likely internal ASU build or tech upgrade. No major concerns unless this becomes habit.
9. 🧮 Ratios — Sexy or Stressy?
Metric | FY25 | Comment |
---|---|---|
OPM | 35% | Sexy as hell |
ROCE | 17% | Strong |
ROE | 12.4% | Reasonable |
Cash Conversion Cycle | -224 days | Negative! A working capital beast |
Dividend Yield | 0.06% | LMAO. A penny drop |
🏁 Verdict: Operationally ultra-efficient. But valuations are straight up Methane-powered.
10. 💰 P&L Breakdown — Show Me the Money
Year | Revenue (₹ Cr) | OPM % | PAT (₹ Cr) | EPS (₹) |
---|---|---|---|---|
FY21 | 2,112 | 26% | 514 | 60.2 |
FY22 | 3,136 | 24% | 536 | 62.8 |
FY23 | 2,769 | 25% | 426 | 50.0 |
FY24 | 2,485 | 31% | 448 | 52.5 |
📉 Sales are yo-yoing, but profits are stabilizing due to margin tailwinds and operating leverage.
11. 🥊 Peer Comparison — Who Else in the Game?
Company | P/E | OPM | ROCE | Revenue (₹ Cr) | Market Cap (₹ Cr) |
---|---|---|---|---|---|
Linde India | 126 | 35% | 17% | 2,485 | 56,451 |
Ellenbarrie Ind. Gas | 98 | 35% | 18% | 312 | 7,924 |
Refex Industries | 30 | 9% | 25% | 2,430 | 5,677 |
Gagan Gases | 34 | 6% | 11% | 5.7 | 9.3 Cr 🤡 |
✅ Linde = Margin King
✅ Refex = Ash business hype
❌ Ellenbarrie = Niche, smaller
❌ Everyone else = Too tiny to matter
12. 👨👩👧 Miscellaneous — Shareholding, Promoters
- Promoter (BOC UK): 75% (DHL-level control)
- FII Holding: 2.6%
- DII Holding: 6.5%
- Public: ~16%
- No pledges, no drama
🧬 This is not a family-run circus. It’s a professionally managed global MNC arm.
13. 🧑⚖️ EduInvesting Verdict™
“This stock is the Reliance of Refrigerated Oxygen. But at P/E 126, even your breathing will need ROI.”
✅ Brilliant business
✅ Monopoly margins
❌ Sluggish revenue growth
❌ Crackhead valuation
Unless a major India industrial capex cycle kicks off OR Linde becomes a green hydrogen play, this stock is priced like it’s 2050 already.
FV Range = ₹1,480 – ₹2,800
CMP = ₹6,620
You do the compressed air math. 💨
✍️ Written by Prashant | 📅 July 7, 2025
Tags: Linde India, industrial gases, monopoly stocks, BOC UK, PSU steel demand, Cryogenic plants, oxygen, hydrogen, EduInvesting multibagger, undervaluation, overvaluation, MNC stocks, PE 126, ROE 12%, FMCG of oxygen