Steamhouse India IPO (9 Sep-11 Sep) Analysis

Steamhouse India Limited is a Gujarat based company engaged in the generation and centralized distribution of industrial gases, primarily steam and nitrogen, through community boiler pipeline networks. Founded in 2015 as Ankleshwar Eco Energy Limited, the company was subsequently renamed and is now headquartered at Surat, Gujarat.

The company pioneered the community boiler system in India, first introducing it in 2014. Under this model, a centralized boiler facility generates steam and distributes it to multiple industrial customers through a shared underground pipeline network within an industrial cluster. This eliminates the need for individual factories to install and operate their own boilers, reducing capital expenditure and operational complexity for customers.

As of July 31, 2026, Steamhouse operates 7 community steam boiler facilities across Gujarat with an aggregate installed capacity of 345 tonnes per hour (TPH), translating to an annualized capacity of 21,85,920 tonnes per annum. The company has laid 60,151 meters of operational pipeline connecting its facilities to customer units spread across key industrial clusters. The company also operates India's first and only distributed nitrogen pipeline supply network as per the Frost and Sullivan Report.

In addition to its core steam generation business, the company distributes steam purchased from third party generators and trades coal as an ancillary activity. In FY2026, own steam generation contributed 52.14% of revenues, purchased steam distribution 17.70%, coal trading 26.92%, and nitrogen and other sources 3.22%.

The company serves 202 customers across 8 or more industry sectors including textiles, chemicals, pharmaceuticals, food processing, and engineering. It uses eco friendly Atmospheric Fluidized Bed Combustion (AFBC) boilers capable of burning waste fuels such as plastic waste, textile chindi, agro waste, and Refuse Derived Fuel (RDF), alongside coal. A cogeneration unit at its Nandesari facility also generates electricity from residual steam heat.

IPO BASICS

The IPO of Steamhouse India Limited is a book built offer comprising a fresh issue of equity shares aggregating up to Rs. 35,300 Lakhs and an offer for sale of equity shares aggregating up to Rs. 6,100 Lakhs by promoter Vishal Sanwarprasad Budhia. The total offer size is Rs. 41,400 Lakhs. The equity shares have a face value of Rs. 2 each and will be listed on BSE and NSE.

Particulars	Details
Offer Type	Book Built Offer (Fresh Issue + OFS)
Fresh Issue Size	Rs. 35,300 Lakhs
Offer for Sale Size	Rs. 6,100 Lakhs
Total Offer Size	Rs. 41,400 Lakhs
Face Value	Rs. 2 per equity share
Listing	BSE and NSE
Anchor Investor Date	September 8, 2026
Offer Opens	September 9, 2026
Offer Closes	September 11, 2026
Book Running Lead Manager	Equirus Capital Limited
Registrar to the Offer	KFin Technologies Limited
Promoters	Vishal Sanwarprasad Budhia, Ritu Budhia, VSB Business Trust, Budhia Business Trust and VB Business Trust

USE OF PROCEEDS

The net proceeds from the fresh issue are proposed to be utilised as follows. The largest allocation is towards repayment of existing borrowings amounting to Rs. 18,000 Lakhs, which will help reduce the company's debt burden and interest costs. The remaining proceeds will fund capacity expansion at three facilities.

Expansion of the Ankleshwar Facility (Phase 3) will receive Rs. 3,798 Lakhs while expansion of the Panoli Facility (Phase 2) will receive Rs. 3,798 Lakhs. Development of a new facility at Dahej GIDC (Phase 2) is allocated Rs. 3,817 Lakhs. The balance of the net proceeds will be used for general corporate purposes, subject to a maximum of 25% of gross proceeds as permitted under applicable regulations.

Utilisation	Amount (Rs. Lakhs)
Repayment of borrowings	18,000
Ankleshwar Facility Phase 3 expansion	3,798
Panoli Facility Phase 2 expansion	3,798
New facility at Dahej GIDC Phase 2	3,817
General Corporate Purposes	Balance (up to 25% of gross proceeds)

FINANCIAL PERFORMANCE

Steamhouse India Limited has delivered strong revenue growth over the three year period ending FY2026. Revenue from operations grew from Rs. 29,171 Lakhs in FY2024 to Rs. 39,511 Lakhs in FY2025 and further to Rs. 49,151 Lakhs in FY2026, representing a compound annual growth rate (CAGR) of 29.8%.

EBITDA grew more moderately from Rs. 6,841 Lakhs in FY2024 to Rs. 6,932 Lakhs in FY2025 and Rs. 8,349 Lakhs in FY2026, a CAGR of 10.5%. EBITDA margins declined from 23.45% in FY2024 to 16.99% in FY2026, primarily due to the rapid growth of the lower margin coal trading segment (26.92% of FY2026 revenues) and purchased steam distribution, both of which commenced or scaled up from FY2025 onwards. The core own steam generation business, which carries higher margins, maintained 52.14% of revenues in FY2026.

Net profit (PAT) grew from Rs. 2,719 Lakhs in FY2024 to Rs. 3,864 Lakhs in FY2026, a CAGR of 19.2%. Return on equity remained healthy at 22.36% in FY2026, though declining from 26.26% in FY2024 as the equity base expanded. The company carries meaningful financial leverage with net debt to equity at 1.57x in FY2026, which the IPO proceeds aim to partially reduce through borrowing repayment.

Metric	FY2024	FY2025	FY2026
Revenue from Operations (Rs. Lakhs)	29,171	39,511	49,151
EBITDA (Rs. Lakhs)	6,841	6,932	8,349
EBITDA Margin (%)	23.45%	17.54%	16.99%
PAT (Rs. Lakhs)	2,719	3,116	3,864
PAT Margin (%)	9.27%	7.82%	7.81%
EPS Basic (Rs.)	1.21	1.38	1.71
Return on Equity (%)	26.26%	23.53%	22.36%
Net Debt to Equity (x)	1.77x	1.63x	1.57x

PEER COMPARISON

The industrial gas sector in India is served by a mix of large multinational players such as Linde India and smaller domestic companies. Steamhouse India operates in a niche segment of community boiler based steam distribution, which has limited direct listed peers. The company has a significantly higher return on equity compared to listed industrial gas peers, reflecting the asset light benefits of the shared pipeline model.

Company	Revenue FY2026 (Rs. Lakhs)	EPS (Rs.)	RoE (%)
Steamhouse India Limited	49,151	1.71	22.36%
Linde India Limited	2,53,064	64.37	12.87%
Ellenbarrie Industrial Gases Limited	34,158	7.54	10.68%

Linde India is significantly larger in scale with revenues of Rs. 2,53,064 Lakhs and trades at a P/E of 99.17x. Ellenbarrie Industrial Gases is a smaller listed peer with revenues of Rs. 34,158 Lakhs and trades at a P/E of 42.74x. Both peers have lower return on equity than Steamhouse India, underscoring the capital efficiency of the community boiler model.

KEY RISKS

Geographic Concentration and Pipeline Dependency

The company's operations are limited to providing steam and other industrial gases to customers in close proximity to its facilities. The business model is inherently geographically constrained as pipeline distribution requires industrial customers to be located within a certain distance from boiler facilities. Growth plans depend on securing suitable land near industrial clusters, a process subject to availability, cost, and regulatory approval. The company has already faced challenges in this regard, including a penalty paid to Maharashtra Industrial Development Corporation (MIDC) in connection with the Tarapur property and a delayed construction timeline for the Pirana facility awarded by the Ahmedabad Municipal Corporation.

Customer Concentration Risk

The top 10 customers contributed 47.87% of revenues from operations in FY2026, with the single largest customer, Sanjoo Dyeing and Printing Mills Private Limited (a group company), accounting for 18.36% of revenues. While 90.72% of revenues came from repeat customers in FY2026, the loss or reduction in orders from any major customer could materially impact financial performance. Four of the top 10 customer agreements are expiring in FY2027 and one in FY2029, and four are currently on a purchase order basis without written agreements.

Coal Price and Supply Risk

Coal is the primary fuel for the company's boilers and accounted for 77.29% of total purchases in FY2026. Coal prices are subject to significant volatility due to global supply and demand dynamics, international trade policies, and currency fluctuations. The company sources coal through Indian importers who predominantly procure it from Indonesia, creating indirect exposure to international commodity and foreign exchange risks. Any increase in coal prices or supply disruption could compress margins or result in an inability to fulfill customer contracts.

Related Party Transaction Concentration

The company has significant business dealings with group companies, particularly Sanjoo Dyeing and Printing Mills Private Limited, which is simultaneously one of the largest customers and one of the largest suppliers. Related party transactions with group companies constituted 99.27% of total related party transactions in FY2026 and amounted to 73.74% of revenues from operations. While all such transactions have been carried out at arm's length, the extent of business dependence on related parties poses a governance and business continuity risk.

Regulatory and Compliance Risk

The company has in the past been in violation of certain material approvals of the Gujarat Pollution Control Board (GPCB), including operating boilers before receiving final regulatory approvals. The company has also received outstanding stamp duty demands and penalties aggregating approximately Rs. 825 Lakhs plus Rs. 2,752 Lakhs in penalties in connection with past amalgamation schemes, which are currently under appeal. Operations across 7 facilities require multiple ongoing environmental, land use, and industrial licenses, the failure to obtain or renew which could result in closure notices or penalties.

Expansion Execution Risk

The company is planning significant capacity additions across 8 new facilities including Nandesari Phase 2, Jhagadia, Vapi Phase 3, Ankleshwar Phase 3, Pirana (Ahmedabad), Panoli Phase 2, Tarapur, and Dahej GIDC Phase 2. Construction and commissioning of these projects involve risks of delays, cost overruns, and regulatory approvals. The Pirana facility, awarded through a tender by the Ahmedabad Municipal Corporation, has already been delayed and is yet to commence commercial operations. Failure to execute expansion plans on schedule could adversely affect revenue growth and return on invested capital.

KEY POSITIVES

Pioneer and Market Leader in Community Boiler System

Steamhouse India Limited is recognized as the pioneer of the community boiler system in India, having first introduced this model in 2014. As per the Frost and Sullivan Report, the company is the leading player in community industrial gas generation and distribution in the country. This first mover advantage has allowed the company to establish a dominant position in key industrial clusters of Gujarat, building institutional knowledge, customer relationships, and regulatory experience that are difficult for new entrants to replicate.

High Barriers to Entry Through Exclusive Pipeline Networks

The community boiler model creates structural barriers to entry once a pipeline network is established in an industrial cluster. Since industrial estates have finite space, a competitor seeking to lay a parallel pipeline network would face significant land and regulatory hurdles. The company's 60,151 meter operational pipeline network (as of July 31, 2026) effectively occupies available underground corridors in the clusters it serves, making competitive displacement operationally and financially challenging.

Strategically Located Facilities Across Gujarat

The company's 7 operational facilities are strategically located at Ankleshwar, Sachin, Nandesari, Panoli, Sarigam, Vapi, and Dahej, all of which are established industrial clusters in Gujarat near ports and transportation hubs. This geographic positioning supports efficient coal procurement logistics while enabling proximity to a large and diverse base of industrial customers across textiles, chemicals, pharmaceuticals, food processing, and engineering sectors.

Diversified Customer Base With High Retention

The company served 202 customers in FY2026, up from 125 in FY2024, demonstrating consistent customer acquisition across its facilities. Revenues from repeat customers accounted for 90.72% of revenues from operations in FY2026. The company has a history of entering into long term supply contracts with customers, with durations ranging from 12 months to 10 years, providing a degree of revenue visibility. The diversified sectoral base also reduces dependence on any single industry.

Eco Friendly and Fuel Flexible Technology

The company's AFBC boilers are designed to burn a wide range of waste fuels including plastic waste, textile chindi, agro waste, and Refuse Derived Fuel (RDF), alongside conventional coal. This fuel flexibility provides operational resilience and positions the company favorably with respect to evolving environmental regulations and cost optimization. The Nandesari facility also operates a cogeneration unit that generates electricity from residual steam heat, adding to operational efficiency. This approach aligns with India's push towards waste to energy utilization and circular economy principles.

Unique Nitrogen Distribution Business

Steamhouse India Limited is the only company in India supplying nitrogen through a distributed pipeline network as per the Frost and Sullivan Report. This unique positioning in nitrogen distribution adds a differentiated revenue stream to the core steam business. As industrial demand for nitrogen in sectors such as food processing, pharmaceuticals, and electronics grows in India, the company is well positioned to expand its nitrogen distribution footprint alongside its community boiler operations, leveraging existing pipeline infrastructure and customer relationships.

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