- From recovering CO₂ to manufacturing ethanol
- Why does this business shift matter to investors?
- Does the ethanol business also benefit its CO₂ operations?
- Two risks investors should not overlook
- Our Take
Punjab Carbonic Limited (PCL), a company known for making liquid carbon dioxide (CO₂) and dry ice, has received SEBI's observations for its proposed IPO. This allows the company to move ahead with its IPO.
The proposed IPO comprises a fresh issue of up to 60 lakh equity shares and an offer for sale (OFS) of up to 35 lakh shares by existing shareholders.
With over 30 years of experience in the industrial gas business, Punjab Carbonic has built its operations around recovering, purifying and selling CO₂ to industries such as food, beverages and pharmaceuticals.
But there is something interesting about its recent financial performance. Revenue jumped from ₹136.53 crore in FY24 to ₹488.17 crore in FY25, an increase of approximately 258%.
So, what is driving this growth? More importantly, is Punjab Carbonic still primarily an industrial gas company, or has it become an ethanol manufacturer?
From recovering CO₂ to manufacturing ethanol
For years, Punjab Carbonic's main business was recovering CO₂ released during industrial processes, particularly at distilleries. It then purified this gas and sold it as liquid CO₂ or converted it into dry ice.
In FY23, its CO₂ business contributed 83.62% of total revenue from operations. However, the company entered a new business in 2022 by setting up a subsidiary, Pancarbo Greenfuels Private Limited (PGPL). The subsidiary operates a grain-based ethanol plant with an installed capacity of 150 kilolitres per day (KLPD).
Ethanol is a type of alcohol blended with petrol to help reduce dependence on conventional fuels.
Once the plant started operations, the company's revenue mix changed significantly:
| Revenue contribution | FY23 | FY24 | FY25 | H1 FY26 |
| Ethanol and DGS | 0% | 11.89% | 69.72% | 74.31% |
Source: Punjab Carbonic's DRHP
DGS is a by-product of ethanol manufacturing that is used as animal feed.
In simple words, ethanol has gone from contributing nothing to accounting for nearly three-fourths of the company's revenue in H1 FY26.
Punjab Carbonic is therefore no longer just a CO₂ specialist. It has become a business with two important engines: industrial gases and ethanol.
Why does this business shift matter to investors?
The difference between these businesses is important because they operate differently.
Punjab Carbonic's CO₂ business involves recovering, purifying and supplying industrial gas. Its top CO₂ customers have had relationships with the company for an average of 18-19 years, indicating established customer relationships.
Ethanol, on the other hand, is sold largely to oil marketing companies (OMCs) such as IOCL and BPCL. Its pricing and demand are influenced by government policies, ethanol blending targets and OMC procurement arrangements.
This difference can also be seen in the company's profit margins. Its consolidated EBITDA margin declined from 12.71% in FY24 to 9.88% in FY25, before recovering to 13.33% in H1 FY26.
Think of it this way: imagine a bakery that sells expensive speciality cakes but suddenly starts supplying ordinary bread in bulk. Its total sales may increase sharply because it is selling much larger quantities, but the profit earned on each rupee of sales may be different.
Similarly, Punjab Carbonic's revenue growth needs to be understood alongside its changing business mix. Higher revenue does not automatically mean better profitability.
Investors must therefore understand both businesses before deciding how to value the company. Our guide on how to analyse an IPO explains why revenue growth, margins and other financial measures should be evaluated together.
Does the ethanol business also benefit its CO₂ operations?
There is an interesting connection between Punjab Carbonic's two businesses. When grains are fermented to produce ethanol, the process releases CO₂ as a by-product.
Punjab Carbonic can recover and process this gas instead of depending entirely on CO₂ generated at other companies' distilleries.
This creates a potential operational advantage:
- The ethanol plant produces fuel for OMCs.
- The fermentation process releases CO₂.
- The company can recover and purify this CO₂ for commercial sale.
This arrangement can reduce dependence on external CO₂ sources and create value from a by-product of ethanol manufacturing.
However, it does not mean the CO₂ is free or that supply is guaranteed. Recovery, purification and transportation still involve costs, and the plant must operate reliably.
Two risks investors should not overlook
Despite the potential benefits, the changing business mix also creates risks.
1. Not all ethanol profits belong to Punjab Carbonic
Punjab Carbonic owns 65% of its ethanol company (PGPL), while its promoter family directly owns the remaining 35%.
How this works in the financial report:
- In Sales: Punjab Carbonic reports 100% of ethanol sales, which makes total revenue look huge at ₹488 crore.
- In Net Profit: Punjab Carbonic only gets 65% of the net profit made by the ethanol plant. The remaining 35% belongs to the promoters and is listed as "Non-Controlling Interest" on the balance sheet.
For example, in the first 6 months of FY26, the ethanol plant made ₹21.80 crore in net profit. Out of this, ₹14.17 crore (65%) went to Punjab Carbonic, while ₹7.63 crore (35%) went to the promoters.
2. Heavy dependence on a few customers
The company's top 10 customers contributed 42.86% of revenue in FY23. This increased to 78.31% in H1 FY26. Its largest customer alone accounted for 39.97% of revenue during the period.
The company attributes much of this increase to the commencement of its ethanol business, which changed its customer mix.
This is important because ethanol sales depend on a relatively concentrated group of buyers, including OMCs. Any change in procurement arrangements, pricing policies or demand could affect business performance.
Investors should also examine the company's other disclosed risks in the DRHP, before making an investment decision. Read our guide on common IPO mistakes to understand why investors should look beyond headline growth numbers.
Our Take
Punjab Carbonic's IPO is not simply a story of a company whose revenue has grown nearly fourfold. It is a story of a business that has changed significantly over the last few years.
Its traditional CO₂ business provides an established industrial presence, while ethanol has emerged as a major contributor to revenue and future expansion plans.
The proposed IPO reflects this shift. Punjab Carbonic plans to invest ₹40.61 crore in expanding its ethanol plant's capacity from 150 KLPD to 185 KLPD. In comparison, it plans to spend ₹19.66 crore on two new CO₂ recovery units in Andhra Pradesh. The opportunity lies in the growth of both businesses and the potential benefit of recovering CO₂ from its own ethanol operations.
The risk lies in ethanol's impact on margins, customer concentration, subsidiary ownership and the company's ability to execute its expansion plans.
For investors, the key question is not just how fast Punjab Carbonic is growing, but what kind of business is driving that growth. Its IPO valuation will need to reflect the economics and risks of both businesses, rather than treating it as a pure industrial gas company.