Axiom Gas Engineering IPO

• Growing Energy Demand: India’s oil and natural gas sector is one of the 8 core industries, with energy demand closely linked to economic growth. India was the third-largest oil consumer globally as of 2023.  

• Expanding Refining Capacity: India’s refining capacity increased from 215.1 MMTPA to 256.8 MMTPA by FY24 and is projected to reach 309.5 MMTPA by 2028, with a long-term target of 450–500 MMTPA by 2030.  

• Rising Petroleum and Gas Consumption: Petroleum product consumption reached 239.2 MMTPA in FY25, while natural gas consumption is projected to increase from 188 mmscmd in FY24 to 297 mmscmd by 2030.  

• Auto LPG Market Presence: Auto LPG is used mainly in auto-rickshaws, taxis and small commercial vehicles as an alternative fuel for spark-ignition engines.  

• Growing Dispensing Network: As of April 1, 2025, PSU oil marketing companies operated 440 Auto LPG Dispensing Stations (ALDS) across India, with Auto LPG sales reaching 73.2 TMT in FY25.  

• Regional Demand Concentration: The Southern region accounts for around 83.6% of India’s total Auto LPG volume sales, indicating significant regional concentration.  

• Cost Advantage Over Petrol: Auto LPG is generally priced at around 40% below petrol by PSU OMCs, offering a potential cost advantage for commercial and fleet operators.  

• Shift Towards Cleaner Fuels: Government policies promoting lower emissions and cleaner mobility could support the adoption of Auto LPG as an alternative to conventional fuels.  

• Expansion of LPG Ecosystem: Domestic LPG customers of PSU OMCs increased from around 14.9 crore in 2015 to nearly 33 crore in 2025, supporting the broader LPG infrastructure ecosystem.  

• Government Support and Investment: India permits 100% FDI in natural gas, petroleum products and refinery infrastructure under the automatic route. The government also announced a $67 billion investment plan for the gas sector in 2024.  

• Stringent Safety Regulations: Auto LPG storage, handling and dispensing are subject to safety and compliance requirements overseen by PESO, along with applicable LPG and motor vehicle regulations.  

• Infrastructure Challenges: Setting up Auto LPG dispensing stations requires investment in storage, safety and dispensing infrastructure, while state-level approvals and land-use requirements can add operational complexity.  

• Import and Price Risks: India’s reliance on imported LPG exposes the sector to international energy prices, currency movements and geopolitical developments.  

• Competition from Alternative Fuels: Auto LPG faces long-term competition from CNG, electric vehicles, ethanol-blended fuels and other emerging mobility technologies.  

• Future Growth Drivers: Market expansion will depend on higher ALDS network density, growth in LPG-compatible vehicle fleets and continued policy support for Auto LPG. 

• Capital Expenditure – ₹2,760 lakh:  

ALDS Expansion: ₹1,800 lakh for setting up 12 new Auto LPG Dispensing Stations across Maharashtra, Telangana and Karnataka.  

Storage & Bottling: ₹430 lakh to enhance LPG storage and bottling infrastructure.  

Green Energy: ₹330 lakh for solar power units at select ALDS outlets.  

Technology & Automation: ₹200 lakh for technology and station automation.  

• Debt Repayment/Prepayment – ₹912.45 lakh: To repay or prepay outstanding bank term loans and reduce interest costs.  

• General Corporate Purposes: For working capital, project development, marketing and other operational needs, subject to applicable limits. 

• Owned Infrastructure and Storage Assets: Operates its own Auto LPG Dispensing Station (ALDS) network, supported by 100 MT storage and bottling plants at Solapur and Shivoor (Aurangabad), Maharashtra.  

• Integrated Value Chain: Manages procurement, bulk storage, transportation and retail dispensing, providing control across key stages of its operations.  

• Geographic Presence: Operates across Telangana, Maharashtra and Karnataka, providing access to multiple regional markets and commercial transport corridors.  

• Regulatory Compliance: Operations are subject to safety standards and statutory approvals from the Petroleum and Explosives Safety Organisation (PESO) under applicable petroleum and LPG regulations.  

• Captive Commercial Customer Base: Serves regular demand from auto-rickshaws, taxis and small commercial vehicles, supporting recurring fuel sales.  

• Healthy Financial Performance: Reported ₹10,075.82 lakh revenue in FY26, with an EBITDA margin of 15.36%, PAT margin of 9.38%, RoE of 28.40% and ROCE of 28.90%.  

• Expansion of ALDS Network: IPO proceeds are proposed to support the establishment of 12 new ALDS outlets, enabling the company to expand its network and reach new markets.  

• Commercial Fleet Partnerships: Partnerships with fleet owners, transport aggregators and driver associations could help increase recurring Auto LPG sales volumes.  

• Ancillary Revenue Streams: The company can explore additional station-based services while expanding its dispenser manufacturing and engineering consultancy businesses.  

• Station Automation and Solar Power: Installation of solar power systems and automated dispensing and reporting solutions could help improve operational efficiency at selected outlets.  

• Policy and Cost Advantage: Increasing focus on cleaner fuels and Auto LPG’s approximately 40% lower retail price compared with petrol could support demand, subject to prevailing regulations and fuel prices. 

• Supplier Concentration: 99.75% of LPG supply came from just 3 suppliers in FY26, creating dependency on a limited vendor base.  

• Related-Party Logistics Dependence: The company relies heavily on group entity Prime Fuel Logistics Private Limited for bulk LPG transportation, exposing operations to logistics-related disruptions.  

• Operational and Safety Risks: Handling and storing pressurised LPG carries risks of leaks, fires, explosions and equipment failures, which could result in financial liabilities and operational disruptions.  

• Geographic Concentration: Operations are concentrated in Karnataka, Telangana and Maharashtra, exposing the company to region-specific regulatory, economic and logistical risks.  

• High Fixed Costs: Station leases, depreciation, compliance and staffing costs may remain high even during periods of lower demand, affecting site-level profitability.  

• Single-Fuel Dependence: The company focuses exclusively on Auto LPG, limiting its customer base to LPG-compatible vehicles and increasing exposure to fuel substitution.  

• Insurance Gaps: The company does not have property/casualty insurance for its ALDS stations or keyman insurance for its core promoters, potentially increasing financial exposure to unforeseen events.  

• Unsecured Debt: Unsecured loans of ₹295.21 lakh as of March 31, 2026, are repayable on demand, which could create liquidity pressure if recalled.  

• Fuel Substitution Risk: Increasing adoption of CNG, EVs, ethanol-blended fuels and other alternative technologies could reduce long-term demand for Auto LPG. 

• Global Price and Currency Volatility: International LPG prices and USD/INR movements can affect procurement costs and narrow Auto LPG’s cost advantage over petrol.  

• Intense Competition: Axiom competes with established PSU oil marketing companies and private ALDS operators with expanding retail networks.  

• Regulatory and Licensing Risks: Delays or changes in PESO approvals, land-use permissions, environmental clearances and other statutory licences could affect existing operations and the launch of new stations. 

• Axiom Gas Engineering IPO DRHP 

• Axiom Gas Engineering IPO RHP 

• SKI Capital Services Limited 

• Contact Number: 040-79615565 

• Email Address: agel.ipo@kfintech.com 

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