INOX Air Products Files DRHP for IPO: What Makes Its Gas Business Stand Out?

When a company comes to the stock market, investors usually expect it to raise money for expansion, repay debt or build new factories.

But INOX Air Products Limited (InoxAP) is taking a different route.

The company has filed its DRHP with SEBI for an IPO comprising an Offer for Sale (OFS) of up to 77,156,663 equity shares. Importantly, the IPO currently contains no fresh issue. That means the company itself will not receive money from the shares being sold.

So, the obvious question is: Why does a company that does not need IPO money want to go public?

The answer becomes clearer when you understand how InoxAP makes money. It operates an industrial-gas business where large customers often depend on its plants for years, while the company generates strong cash flows from those long-term contracts.

How InoxAP's Gas Business Works Like a Utility

InoxAP makes and supplies gases such as oxygen, nitrogen and argon to industries including steel, refining, chemicals and healthcare.

The raw material for its main gases is surprisingly simple: ordinary air. InoxAP uses Air Separation Units (ASUs) to separate the air into oxygen, nitrogen, and argon, which are then supplied to customers.

These gases may sound basic, but industries depend on them for critical jobs. Oxygen helps keep hospital patients breathing and is used in steelmaking. Nitrogen helps keep packaged foods fresh and helps prevent fires in chemical plants. Argon protects hot metal from reacting with air during welding.

The bigger advantage, however, comes from how InoxAP supplies these gases. For large industrial customers, it can build an ASU at or near the customer's plant and supply the gas directly. These on-site supply arrangements can last 10 to 20 years and may include take-or-pay contracts. In simple words, the customer agrees to pay a minimum amount even if it does not use the full contracted quantity.

This creates a relationship that is difficult to replace. A large industrial customer cannot simply switch suppliers because doing so could require a new gas plant and significant investment.

InoxAP also uses decaptivation, where an industrial company effectively outsources its gas-production facility to InoxAP and then buys the gas back under a long-term arrangement.

For smaller or more spread-out customers, InoxAP supplies liquid gases through cryogenic tankers. As per the DRHP, it had a 31.0% market share in India's merchant liquid market, supported by 28 manufacturing locations, 5,106 tonnes per day of capacity and 739 transport tankers.

So, the business is not just about making gases. It is about making essential gases at scale and building the infrastructure needed to deliver them reliably for years.

Strong Financials Show the Strength of the Business

This business model has translated into strong financial performance.

Revenue from operations increased from ₹2,589.94 crore in FY24 to ₹2,789.78 crore in FY25, and then to ₹3,033.93 crore in FY26.

More striking is the company's profitability. In FY26, InoxAP reported an EBITDA margin of 51.29%. That means it generated roughly ₹51 of operating profit before interest, tax, depreciation and amortisation for every ₹100 of revenue.

Its EBITDA margin had already risen from 47.99% in FY24 to 49.85% in FY25. For comparison, Linde India reported an EBITDA margin of 33.50% in FY25.

The company also reported ₹913.87 crore of profit after tax in FY26 and generated ₹1,264.24 crore of cash from operations. That last number helps explain the IPO structure.

Why Does InoxAP Not Need IPO Money?

This is the most important part of the InoxAP IPO story.

A company usually needs a fresh issue when it needs outside money for expansion, debt repayment or working capital. InoxAP appears to have much less dependence on external capital.

In FY26, it spent ₹1,161.45 crore on property, plant and equipment, while generating ₹1,264.24 crore from operations. In other words, its operating cash flow was enough to cover that year's reported capex. The company also had ₹1,516.63 crore of mutual fund investments as of March 31, 2026.

So, the absence of a fresh issue is not necessarily a sign that the business lacks growth plans. It can also mean that the company has been able to fund a large part of its expansion internally.

The IPO is therefore primarily about existing shareholders selling part of their holdings, rather than the company asking the public for fresh capital.

Investors can learn more about how an OFS differs from a fresh issue in INDmoney's guide to IPO types and OFS.

Where Could InoxAP Grow Next?

InoxAP is not relying only on traditional industries such as steel, chemicals and refining. It is also moving towards newer areas where extremely pure gases are required.

The company is developing capabilities for semiconductors and electronics, including ultra-high-purity gases and electronic-grade nitrous oxide. It is also targeting opportunities linked to solar manufacturing and green hydrogen.

These businesses could open new growth avenues, but they come with an important question: how quickly will the money invested today start generating returns?

That matters because InoxAP's adjusted ROCE fell from 30.24% in FY24 to 24.45% in FY26, while capital work-in-progress increased to ₹1,414.74 crore.

For investors, the key is not simply whether the company spends more. It is whether those investments eventually generate returns strong enough to justify the capital being deployed.

A 27-Year Joint Venture Is Now Going Public

InoxAP was formed in 1999 as a 50:50 joint venture between the Jain family-led INOX Group and Air Products & Chemicals. The partnership has therefore been operating for nearly three decades.

The IPO will see both sides participate in the OFS, according to the draft, rather than the company raising new equity capital.

That makes the IPO less about funding the next factory and more about bringing an established business and its existing shareholders into the public markets.

What Should Investors Watch?

InoxAP's long-term contracts, high margins, strong cash generation, and large operating network give the business several clear strengths. But investors also need to look at what could go wrong.

The company remains exposed to industries such as metals, steel and refining, while its newer semiconductor and green-energy projects will require significant capital and time before they contribute meaningfully to earnings. And because the IPO is an OFS with no fresh money going into the company, the valuation becomes even more important.

At the DRHP stage, InoxAP presents an unusual IPO story: a cash-generating business that appears capable of funding much of its expansion internally, while existing shareholders are offering part of their ownership to public investors.

The bigger question will come when the price band and final valuation are announced. A strong business can still be a poor investment if investors pay too much for it.

So, the IPO is not really a story about InoxAP needing public money to grow. It is about whether investors are getting a good enough price to own a stake in an established, cash-generating business and its future growth.

The business may be strong. The valuation will decide whether the IPO is attractive.