Linde India stock rises 6%, hits fresh record high on agreement with Tata Steel

Shares of Linde India surged over 6% on September 5, climbing to an all-time high of ₹7,641. This spike came after the company announced a major deal with Tata Steel. Linde India has secured an agreement to acquire industrial gas supply assets for Tata Steel's Kalinganagar Phase 2 expansion project. This acquisition includes two massive 1800 tons per day (tpd) Air Separation Units (ASUs), cementing Linde India’s role in this critical project and boosting its stock value.

Details of the Tata Steel agreement

The deal marks a long-term partnership between Linde India and Tata Steel. Linde India was chosen as the successful bidder to manage and operate the gas supply infrastructure at Tata Steel’s Kalinganagar plant for the next 20 years. As part of this agreement, Linde India will take over the construction and operation of two air separation units, which the company will internally fund.

This deal highlights Linde India’s expertise in the gas industry and strengthens its position in the industrial sector. Investors searching for a promising share to buy may find Linde India appealing due to its strong operational base and future growth prospects linked to this large-scale infrastructure project.

Linde India’s profile and operations

Linde India is a subsidiary of the BOC Group UK, which holds a 75% stake in the company. Known for its leadership in the production of industrial and medical gases, Linde India also specialises in building cryogenic and non-cryogenic air separation plants. The company operates in three key segments:

• Gas and related products: The core business of producing and distributing gases for industrial use.
• Healthcare: Supplying medical gases, which play a crucial role in hospitals and other medical institutions.
• Project engineering: Involvement in building air separation plants and other critical infrastructure for gas supply.

Linde India has a vast operational network, running 14 manufacturing units across various states, including Karnataka, Telangana, Gujarat, Haryana, Rajasthan, Odisha, Jharkhand, West Bengal, Maharashtra, Uttarakhand, and Tamil Nadu. 

Financial performance and outlook

In the June quarter of FY24, Linde India reported solid financial performance, with a 13.8% year-on-year increase in net profit, amounting to ₹113.7 crore, compared to ₹99.9 crore in the same quarter last year. However, the company experienced a slight dip in sales, which fell by 9.4% year-on-year to ₹653.2 crore, down from ₹721 crore.

Despite the sales decline, the long-term growth prospects for Linde India remain strong, as evidenced by its strategic partnership with Tata Steel and its continuous efforts to expand its infrastructure. Analysts also see potential in the stock, with two brokerages currently covering Linde India. One brokerage has issued a strong 'buy' recommendation, while the other suggests holding the stock for now.

So far this year, Linde India’s shares have surged by over 33%, outperforming the Nifty 50 index, which saw a 16% rise during the same period. 

Key takeaways

• Linde India’s stock surged by over 6% following a deal with Tata Steel to acquire gas supply assets at the Kalinganagar Phase 2 project, including two 1800 tpd air separation units.
• The company will operate and manage these assets for the next 20 years, solidifying its long-term partnership with Tata Steel.
• Linde India operates in three major segments: Gas and Related Products, Healthcare, and Project Engineering. It has 14 manufacturing units across India.
• Financially, the company posted a 13.8% year-on-year growth in net profit, though sales saw a 9.4% decline in the June quarter.
• With a 33% growth in share value so far this year, Linde India is an attractive share to buy for investors looking for stability and long-term potential in the industrial gas sector.