🟢 At a Glance
Ingersoll-Rand India makes industrial compressors and prints money while doing it. It’s debt-free, cash-rich, ROCE on steroids (60%), and has 5Y profit CAGR of 26%. But here’s the twist — the stock trades at a fat 48x earnings. Can “selling air” justify this premium?
1. 🎬 Introduction with Hook
You know how some companies manufacture stuff?
Ingersoll-Rand said, “Bhai hum hawa bech ke kamaenge.”
That’s right. They’re in the air compressor business — and they’ve built a ₹13,000 Cr empire around it. Every plant, pharma factory, bottling unit, and even god knows what else needs compressed air. IRIL steps in, installs a beast of a machine, and then charges you again for maintenance.
Result?
💰 26% profit CAGR
💸 Zero debt
📈 ROCE = 60%
📦 Inventory days = 85
But while fundamentals are flying high, so is the valuation. 48x P/E for a capital goods company? Let’s unpack the pressure gauge.
2. 🏭 Business Model – WTF Do They Even Do?
Short answer: They manufacture industrial air compressors.
Slightly longer answer:
- Core biz is selling screw/centrifugal air compressors to large industries
- Long-term contracts for servicing, maintenance, installation, and spares
- Presence across India’s industrial heartland: Gujarat, Maharashtra, Tamil Nadu
- Serves sectors like auto, pharma, F&B, cement, chemicals
Global Brands under IR umbrella:
Ingersoll Rand, CompAir, ARO, Gardner Denver, NASH, Milton Roy, etc.
And these aren’t jugaadu units – these are built to ISO standards, for mission-critical operations.
3. 📊 Financials Overview – Profit, Margins, ROE, Growth
| FY | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | ROCE % | ROE % |
|---|---|---|---|---|---|
| FY23 | 1,151 | 183 | 21% | 44% | 39% |
| FY24 | 1,214 | 222 | 24% | 51% | 45% |
| FY25 | 1,336 | 268 | 25% | 60% | 45% |
Other metrics:
- 5Y Sales CAGR: 14%
- 5Y PAT CAGR: 26.3%
- Dividend Payout FY25: 53%
This company doesn’t grow fast — but it grows clean. No debt. No dilution. No excuses.
4. 💰 Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹4,059
- EPS FY25: ₹84.75
- P/E: 47.9x
- P/B: 21x
- Market Cap: ₹12,814 Cr
Compare that to peers:
| Stock | P/E | ROCE |
|---|---|---|
| Cummins | 48.8 | 36.4% |
| Elgi | 49.7 | 21.8% |
| IRIL | 47.9 | 60.0% |
🧠 EduTake: Expensive? Yes. But it’s giving Cummins-style consistency with better capital efficiency. You’re paying for quality + clean balance sheet + sticky cash flows.
5. 🔥 What’s Cooking – News, Triggers, Drama
🏭 Sanand Facility Update:
- New unit coming up in Gujarat
- Was delayed, now production starts Aug 2025
- Could boost capacity + service contracts
🧑💼 Leadership Churn:
- MD Sunil Khanduja appointed (Nov 2024)
- Exec Director Rajesh Ganjoo resigned in 2024
🧾 Dividends:
- FY24 payout ~₹74/share
- FY25 payout expected ~₹45–50/share (53% payout)
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Total Equity | ₹610 Cr |
| Total Debt | ₹11 Cr |
| Cash & Equivalents | ₹745 Cr |
| Net Cash | ₹734 Cr |
Net cash balance = 2.7x annual PAT 🤯
There’s more cash in this company than pressure in its compressors.
7. 💵 Cash Flow – Sab Number Game Hai
| FY | CFO (₹ Cr) | FCF | Capex |
|---|---|---|---|
| FY23 | ₹148 | High | ₹5 Cr |
| FY24 | ₹207 | Higher | ₹34 Cr |
| FY25 | ₹265 | Highest | ₹38 Cr |
The business is throwing off ~20% of its market cap in cash every 5 years. That’s elite.
8. 📐 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE | 60% 🔥 |
| ROE | 45% 🔥 |
| OPM | 25% |
| Asset Turnover | ~1.4x |
| Debt/Equity | < 0.05 |
| Working Capital Cycle | ~52 days |
| Inventory Days | 85 |
| Debtor Days | 82 |
📈 It’s operationally tight and financially clean. No working capital bloating. No receivable drama.
9. 📊 P&L Breakdown – Show Me the Money
- Revenue up from ₹910 Cr (FY22) → ₹1,336 Cr (FY25)
- PAT more than doubled from ₹110 Cr → ₹268 Cr
- OPM expanded from 17% → 25%
- Tax rate stable ~25–26%
If this were a movie, the title would be:
“How to Get Rich Selling Air”
10. 🥊 Peer Comparison – Who Else in the Game?
| Company | CMP (₹) | P/E | ROCE | Div Yld |
|---|---|---|---|---|
| Ingersoll-Rand | 4,059 | 47.9 | 60.0% | 1.97% |
| Cummins | 3,524 | 48.8 | 36.4% | 1.46% |
| Elgi Equipments | 550 | 49.7 | 21.8% | 0.4% |
| KSB | 826 | 56.5 | 23.8% | 0.48% |
| Shakti Pumps | 930 | 27.4 | 55.3% | 0.07% |
🧠 Verdict? IRIL is top-tier in capital efficiency, but valuation has already run ahead of the pack.
11. 🧬 Misc – Shareholding, Promoters, Ownership Drama?
- 👑 Promoter holding: 75%
- 🧓 FIIs: 1.88% (rising slowly)
- 🏦 DIIs: 7.12%
- 🪝 Public: 16.02%
Zero pledging. Clean books. No bonus, no splits, no gimmicks.
12. 🧠 EduInvesting Verdict™
Ingersoll-Rand India is the Durex of compressors — premium product, sticky clients, high margins, and zero nonsense.
✅ Debt-free
✅ High cash
✅ ROCE of 60%
✅ Dividend-friendly
But…
❌ Trades at 48x earnings
❌ Growth is steady, not explosive
❌ Capacity expansion delayed till FY26
🎯 Fair Value Estimate (FV Range):
Based on:
- Sustainable EPS growth of 15–18%
- 5Y median P/E range of 30–35x
- FY26E EPS of ~₹98
Fair Value Range = ₹2,940 – ₹3,430
So at ₹4,059 — this might be priced for perfection. Unless the new Sanand facility brings a big bump, you’re paying upfront for future growth that’s yet to kick in.
✍️ Written by Prashant | 📅 July 9, 2025
Tags: Ingersoll Rand, Industrial Compressors, Capital Goods Stocks, High ROCE India, Debt Free Companies, EduInvesting, Sanand Facility, Cummins India Peers, Stock Analysis 2025
