Linde India Tata Steel agreement

Linde India Surges After Agreement with Tata Steel for Industrial Gas Supply Assets

Linde India, a leading player in industrial and medical gases, recently saw a significant surge in its stock price following an important agreement with Tata Steel. The company’s shares jumped over 6% to Rs 7,641 on September 5, 2024, after it announced the acquisition of Tata Steel’s industrial gas supply assets at the Kalinganagar Phase 2 expansion project. This deal strengthens Linde India’s position in the industrial gas market and demonstrates its commitment to long-term growth in collaboration with key industry players like Tata Steel.

Overview of the Tata Steel Agreement

Linde India entered into a 20-year agreement with Tata Steel to take ownership and operate the gas supply infrastructure at Tata Steel’s Kalinganagar plant. This acquisition includes two 1800 tons per day (tpd) Air Separation Units (ASUs) currently under construction. The deal represents a major strategic step for Linde India, as these ASUs will be pivotal in supporting Tata Steel’s expanding operations at Kalinganagar.

The Air Separation Units are responsible for producing oxygen, nitrogen, and argon—key gases used in steel manufacturing. The completion of this project will not only enhance Tata Steel’s production capabilities but also cement Linde India’s role as a leading industrial gas supplier in the region.

Strategic Significance of the Deal

This agreement positions Linde India as a critical partner for Tata Steel’s future growth. By acquiring and managing these assets, Linde India ensures stable and long-term gas supply to one of India’s largest steel producers. The agreement also reflects Linde India’s strategic focus on expanding its market presence through key partnerships and operational efficiency.

The two air separation units are essential for Tata Steel’s Phase 2 expansion at the Kalinganagar plant, making this partnership crucial for both companies’ future endeavors. Moreover, Linde India will fully fund the construction of these units, showcasing its financial strength and commitment to infrastructure development.

Linde India’s Operational Footprint

Linde India operates 14 manufacturing units spread across multiple states, including Karnataka, Telangana, Gujarat, Haryana, Rajasthan, Odisha, Jharkhand, West Bengal, Maharashtra, Uttarakhand, and Tamil Nadu. These plants produce a wide range of industrial and medical gases, including oxygen, nitrogen, argon, and more, for diverse industries such as healthcare, metallurgy, chemicals, and food processing.

As a subsidiary of the UK-based BOC Group, Linde India benefits from strong global expertise in gas production and distribution. With a 75% stake held by the BOC Group, Linde India has solid financial backing and access to cutting-edge technology in gas production.

Performance and Financials

Linde India has had a strong financial performance in recent years, and this deal with Tata Steel is expected to boost its growth even further. In the June quarter of 2024, the company reported a 13.8% increase in net profit, reaching Rs 113.7 crore, up from Rs 99.9 crore in Q1FY24. Despite the rise in profit, sales saw a slight decline, falling by 9.4% year-on-year to Rs 653.2 crore from Rs 721 crore.

The company’s financial stability and strong profit growth make it an attractive investment for shareholders, further boosted by the latest deal with Tata Steel.

Market Performance and Outlook

Linde India’s shares have been on an upward trajectory in 2024, gaining over 33% year-to-date compared to the Nifty 50’s 16% rise. This outperformance can be attributed to the company’s strategic deals, robust financials, and leadership in the industrial gas sector. Linde India Tata Steel agreement, Currently, two brokerage firms cover Linde India’s stock, with one giving a strong ‘buy’ recommendation and the other advising a ‘hold.’ Analysts believe that Linde India’s consistent performance, coupled with its strategic expansions, will continue to drive share price growth in the coming months.

Conclusion

The agreement with Tata Steel marks another significant milestone for Linde India, reinforcing its position as a market leader in industrial gas supply. With 14 manufacturing units across India and a strong commitment to partnerships with industry giants, Linde India is poised for continued growth. Linde India Tata Steel agreement, This acquisition not only expands its operational footprint but also enhances its financial performance, making it an attractive choice for investors. As the company continues to grow through strategic initiatives, Linde India’s future in the industrial gas market looks bright.

FAQs:

1.What is Linde India’s new deal with Tata Steel?

A. Linde India has entered into an agreement to acquire Tata Steel’s industrial gas supply assets, including two 1800 tpd Air Separation Units, for 20 years.

2.How does this agreement benefit Linde India?

A. This deal strengthens Linde India’s position as a leading industrial gas supplier and provides a long-term partnership with Tata Steel, one of India’s largest steel producers.

3.What are Air Separation Units (ASUs)?

A. ASUs are facilities that separate atmospheric air into its primary components—oxygen, nitrogen, and argon—used in various industries like steel manufacturing.

4.How many manufacturing units does Linde India operate?

A. Linde India operates 14 manufacturing units across states like Karnataka, Telangana, Gujarat, Haryana, and Odisha, among others.

5.What is Linde India’s market presence?

A. Linde India specializes in industrial and medical gases, with significant market share across multiple industries, including steel, healthcare, and chemicals.

6.What was Linde India’s profit in the June 2024 quarter?

A. Linde India reported a net profit of Rs 113.7 crore in the June quarter, a 13.8% year-on-year increase.

7.What was the stock performance of Linde India in 2024?

A. Linde India’s shares surged over 33% year-to-date, outperforming the Nifty 50’s 16% rise.

8.How is the acquisition funded?

A. Linde India will internally fund the construction and acquisition of the two Air Separation Units at Tata Steel’s Kalinganagar plant.

9.What industries does Linde India serve?

A. Linde India serves a variety of industries, including healthcare, metallurgy, chemicals, and food processing.

10.What are the future growth prospects for Linde India?

A. With strategic deals like the Tata Steel partnership and ongoing expansions, Linde India is poised for continued growth in the industrial gas sector.

Linde India Tata Steel agreement

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