Inox India and the LNG Boom

A few months ago, Hertz, a rental giant, was in news for dumping its EV fleet in favour of gas cars.

The reason? The hidden costs of EV ownership.

The move led to some correction in Tesla and another EV maker Polestar.

Back in India, while the EV penetration is unfolding in two and three wheelers, lack of infra and cost related reasons have led to slow adoption in 4 wheelers and heavy-duty vehicles.

As the future of electrification is being discussed amid subsidy related developments, a new fuel trend is about to emerge.

For its long-haul trucks and heavy-duty vehicles, India is planning to use LNG. The target is to have a third of the fleet run on LNG instead of diesel in five to seven years.

With this move, India plans to target pollution and cut dependence on diesel and increase the share of natural gas from 6% to 15% in the energy mix.

Is this just another target or a real opportunity?

Well, other countries give some confidence.

While China has a fleet of over 800,000 LNG trucks on its roads, the number in the US and Europe is estimated to be 15,000.

In comparison, India is still taking baby steps, with hardly 500 such trucks on the road.

To be sure, at present, this is a bit of chicken and egg situation.

A large-scale adoption needs infrastructure of LNG filling stations which is lacking.

For LNG filling stations to be viable, there needs to be an LNG based fleet that can justify that investment (which isn't there yet).

To start with, the government is setting up first 50 LNG fuel stations along the Golden Quadrilateral. By 2030, the plan is to develop 1,000 such stations. This side of the supply chain will be catered by companies in the oil and gas sector - IOCL, BPCL, HPCL, GAIL, Petronet LNG, Gujarat Gas and their joint ventures/ subsidiaries.

Coming to the demand side and a fleet owner's perspective...

The initial cost of owning an LNG based truck is higher than that of diesel. However, as per studies by Niti Aayog, LNG is a better option if you consider total cost of ownership, including running costs.

And then there are other benefits.

With a single fill of LNG, upto 1,400 km can be covered. This makes it ideal and efficient for long haul journeys. The driver fatigue is limited due to less noise.

Then there are ESG brownie points. As such, the fleet operators like Dehlivery, companies in cement, chemical, mining, containers, and steel industries are seriously considering a fleet makeover.

To cater to this demand, Tata Motors, Ashok Leyland and Blue Energy have already introduced LNG trucks.

Apparently, 2,500 trucks would be a good number to justify the initial investment in 50 LNG stations.

Do note that Blue Energy alone has already deployed 500 LNG-based heavy-duty trucks on Indian roads.

So, these are some obvious names in the trend. Time will tell how this opportunity pans out. In the meantime, there is a specific stock you should have on your watchlist if this theme interests you.

The company is Inox India.

You see, LNG needs to be stored and transferred at low temperatures.

Inox India is a leading global provider of customised cryogenic (related to dealing with low temperatures) equipments - storage tanks, transport tanks, vaporizer, regasification equipment. It has a customer base in over 100 countries. Almost 50% of its revenue are from exports.

Its business segments include industrial segments, LNG and cryo scientific (satellite, propulsion systems and launch facilities).

In its latest order book of Rs 11 bn, 23% of orders are for LNG segment. Revenuewise, the segment accounts for 15% in the latest quarter.

Inox India supplies to both PSUs for LNG fueling stations and to truck makers for LNG fuel tanks.

In LNG stations, the company's market share is 70-75%. It alone has supplied over 60% of tanks in stationary & trailer mounted mobile LNG tanks in India.

As such, a serious shift towards LNG could be a big positive for the company. The company is almost debt free. Its operating profit margin is well over 20% and return ratios are above 30%.

As such, a serious shift towards LNG could be a big positive for the company.

Do note that this is not a recommendation. Readers should do their own due diligence before acting on information expressed here.

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Warm regards,


Richa Agarwal
Editor and Research Analyst, Hidden Treasure
What are the 3 main types of stock? Research Private Limited (formerly What are the 3 main types of stock? Agora Research Private Limited) (Research Analyst)