INOX India Q1 FY26: Is This Cryogenic Stock Still a Fast Grower? Orders & LNG Hold Clues

The Indian equity markets have seen a bit of a mixed bag recently. After a stellar Q1 rally for Nifty and Sensex, July brought some correction due to cautious guidance and global uncertainty. Yet, amidst this, certain sectors have continued to outperform, notably banks, capital goods, and infrastructure-led cyclicals – benefiting from a renewed capex cycle and government impetus. This macroeconomic backdrop sets the stage for our deep dive into INOX India Limited’s Q1 FY26 performance.

INOX India, a global leader in customized cryogenic equipment, operates right at the heart of this domestic growth theme, benefiting from strong policy tailwinds and the global push towards clean energy. Let’s peel back the layers of their latest earnings and understand what it means for their future trajectory, particularly focusing on the crucial changes that could shape future earnings.

Orders Are Surging: A Clear Runway for Future Revenue 🚀

For a project-oriented B2B company like INOX India, the order book is arguably the most crucial forward-looking indicator. And the picture for Q1 FY26 is certainly encouraging, indicating robust future revenue visibility!

The total order backlog reached a new high of ₹1,457 Crore in Q1 FY26, a substantial jump from ₹1,105 Crore in Q1 FY25 (+31.8% YoY) and a healthy sequential increase from ₹1,356 Crore in the previous quarter (Q4 FY25). This sustained growth in backlog is a strong signal of demand for their specialized solutions.

Order Backlog Trends (₹ Crore)

• LNG and Cryo-Scientific Driving Growth: While the Industrial Gas (IG) backlog saw a steady increase, the real stars were LNG and Cryo-Scientific (CSD). LNG backlog nearly doubled from Q1 FY25 (though slightly down QoQ from a high base, still robust), highlighting the company’s successful strategic pivot towards this high-growth segment. CSD also rebounded strongly this quarter, indicating renewed project momentum.
• New Orders Fueling the Pipeline: In terms of fresh orders received, INOX India brought in ₹415 Crore in Q1 FY26. This is an 8.4% increase over the average quarterly orders received in FY25 (₹383 Cr). This quarter’s inflow was led by a significant uptick in Industrial Gas orders (₹146 Cr vs ₹39 Cr in Q4 FY25) and continued strength in Cryo-Scientific (₹184 Cr). Even the LNG segment received a healthy ₹85 Crore in new orders, showing consistent demand even after a major one-off project in Q3 FY25.
  • Notably, the company secured a major order for the Cryostat Thermal Shield from ITER (International Thermonuclear Experimental Reactor) valued at approximately ₹145 Crore, expected to span nearly 2 years. This underscores its increasing participation in high-value, long-gestation clean energy projects.
  • New areas like the first-of-its-kind order for CO2 battery storage and the launch of India’s first ultra-high-purity Ammonia ISO tank container for the chip and solar sectors also contributed, demonstrating innovative product development translating into early order wins.
• Export Dominance Continues: Exports remain a critical growth engine, contributing 63% to the total order backlog and 55% to new orders received in Q1 FY26. This global diversification provides resilience against any localized slowdowns and validates INOX India’s world-class manufacturing capabilities.

The management’s strategic focus on emerging clean energy segments like LNG, Liquid Hydrogen, and Fusion is clearly translating into order wins, reinforcing their capability to deliver on their guidance by aligning their offerings with future market needs.

Revenue Performance: A Strategic Shift in Action 🎯

INOX India delivered a robust 16.7% year-on-year (YoY) increase in total income, reaching ₹352 Crore in Q1 FY26. While there was a modest sequential dip from the strong Q4 FY25 performance (Q4 typically sees higher dispatches), the underlying trends are highly positive. The management is targeting an 18-20% revenue increase for the full FY26, and the Q1 performance positions them well to achieve this.

Revenue Performance (₹ Crore)

The most notable and positive change in the revenue mix is the surge in the LNG segment, which more than doubled its contribution YoY from 15% to 29% of total revenue, achieving its highest ever quarterly sales of ₹100+ Crore. This significant shift underscores the company’s successful execution of its strategy to capitalize on the booming LNG market, driven by global demand for cleaner and cheaper energy and favorable regulatory changes in India. Conversely, the Industrial Gas segment’s share declined from 62% to 48%, indicating a healthy rebalancing of the portfolio towards higher-growth areas.

Key operational highlights from the earnings call also point to strong volume growth, reinforcing the quality of sales:

• Highest ever sales of IMO Tanks (18 units), critical for industrial gas logistics.
• Highest ever sales of LNG Fuel Tanks (144 units), indicating strong traction in the clean mobility segment, which is a significant growth area for the company. The company supplied approximately 145 LNG fuel tanks to major OEMs, aligning with the “Powering the Next Wave of Clean Mobility” growth driver highlighted in their presentation.
• The beverage keg division, though small, secured global approval from Heineken and is optimistic about scaling volumes, targeting at least 100,000 kegs this year, further diversifying revenue streams.

This indicates that the growth isn’t just about price increases but is significantly backed by volume expansion, especially in the strategic LNG and clean mobility space, which bodes well for sustainable future growth.

Earnings Analysis: Margin Expansion with Strategic Investments 🤔

Profitability continued its upward trajectory with EBITDA growing 19.4% YoY to ₹89 Crore and PAT increasing 18.9% YoY to ₹61 Crore. Margins also saw a slight expansion, with EBITDA margin at 25.1% (up from 24.5% YoY) and PAT margin at 17.3% (up from 17.0% YoY). The management expects EBITDA growth to continue outpacing revenue growth for the full FY26, a healthy sign.

Key Profitability Metrics (₹ Crore)

However, a closer look at the P&L notes reveals a few key drivers behind this margin improvement:

• Other Income: A significant 136.1% YoY increase in other income (₹12.7 Cr) largely contributed to the overall profit growth. This was primarily due to higher forex gains, mutual fund gains, and a one-off reversal of credit losses. While positive, it’s important to note that this component is non-operational and less predictable than core business earnings.
• Material Consumption Efficiency: The percentage of material consumption relative to revenue decreased from 43.6% in Q1 FY25 to 38.3% in Q1 FY26. Management attributed this to a favorable product mix (e.g., increased sales of higher-margin disposable cylinders), changes in Incoterms for a large export order, and high margin booked on a specific project due to Percentage of Completion Method (POCM) accounting. This indicates a positive shift in product profitability and effective project execution.
• Finance Costs: A sharp 64.5% YoY reduction in finance costs (to ₹0.7 Cr) due to improved collections and lower working capital utilization also provided a tailwind to the bottom line. This reflects efficient cash management and their robust debt-free status.
• Employee Benefits Expense: This expense increased by 29.5% YoY, primarily due to a 21% increase in manpower, including 121 new employees for the new Cryo tank manufacturing facility at Savli. This is a strategic investment in future growth and is well within the budget, indicating that the company is actively scaling up its human capital to support anticipated expansion. The Savli plant’s performance is expected to stabilize and contribute more significantly to profitability within 6-12 months.

Overall, the earnings performance is healthy. While some non-operating gains contributed, the operational efficiencies and favorable product mix also played a significant role. Crucially, total operating expenses as a percentage of revenue slightly decreased (from 75.5% to 74.9% YoY), indicating good cost management despite growth investments. Based on this consistent growth, strategic investments, and future potential, INOX India continues to reinforce its position as a Fast Grower in the industrial products space.

Working Capital and CapEx: Building for Scale 🏗️

The balance sheet reflects a company poised for expansion and efficiently managing its resources.

• Inventory Build-up: Raw material inventory, including stores and spares, saw a significant increase (from ₹288 Cr in Mar'25 to ₹344 Cr in Jun'25). This isn’t a sign of sluggish sales but rather a proactive and strategic move to support the ramp-up of major projects like Bahamas and Highview, and the new Cryo tank manufacturing facility at Savli. This suggests strong future production and sales execution, as these projects have longer lead times and require significant material stocking.
• Contract Assets & Customer Advances: The increase in ‘Contract Assets’ (₹221 Cr in Jun'25 vs ₹126 Cr in Mar'25 – revenue recognized but not yet billed under POCM for large, long-lead-time projects) is largely balanced by a corresponding rise in ‘Advances & Deposits from Customers’ (from ₹387 Cr to ₹487 Cr). This indicates healthy working capital management for their project-based business model, with customer advances effectively funding project execution and minimizing the need for external financing.
• Trade Receivables: It’s positive to note that trade receivables decreased from ₹252 Cr in Mar'25 to ₹200 Cr in Jun'25, even as sales increased YoY. This indicates better collections and improved working capital efficiency, contributing to the lower finance costs.
• Debt-Free Status: INOX India maintained its impressive debt-free status with a Net Debt:Equity ratio of (0.30), reflecting robust financial health and strong internal accruals. This provides ample financial flexibility for future growth initiatives.
• CapEx for Growth: The company utilized ₹15 Crore for CapEx in Q1 FY26, alongside paying a significant dividend of ₹27 Cr. They have also guided for a total CapEx of around ₹80 Crore for FY26. This investment will primarily fund the expansion of the Kandla facility for large vessels (e.g., 1,500 cubic meter vessels for industrial applications) and existing plants at Kalol and Savli. Specifically, ₹5-6 Crore is allocated for LNG fuel tank capacity building at the current facility, with evaluation for a larger dedicated facility underway. This CapEx is clearly growth-oriented, focused on expanding capacity to meet future demand, particularly in the booming clean energy applications.

The Big Picture: A Cryogenic Future 💡

INOX India’s Q1 FY26 performance is a testament to its strategic foresight and operational agility. The company is expertly leveraging the global clean energy transition, from the soaring demand for Hydrogen and LNG to the transformative potential of fusion energy (evident in the ITER project). The policy tailwinds in India, driving infrastructure and manufacturing, further solidify their domestic growth prospects, aligning perfectly with the broader economic theme of capex revival.

With a consistently growing and record-breaking order book, a strategic and successful shift in revenue mix towards higher-growth segments like LNG, healthy profitability driven by operational efficiencies, and a rock-solid, debt-free balance sheet backing significant CapEx for future growth, INOX India appears to be navigating the market confidently. Investors should focus on the company’s ability to consistently convert its substantial backlog into profitable revenue and its continued push into cutting-edge clean energy solutions. The management’s proactive stance on capacity expansion and new product development truly sets the stage for a compelling journey ahead as a Fast Grower in the rapidly evolving cryogenic solutions market.

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