Steamhouse India eyes expansion beyond Gujarat; 300 tonne capacity in pipeline

Surat-based Steamhouse India is looking to expand its industrial steam business beyond Gujarat, with new capacity planned in the state and projects being evaluated in other industrial hubs across India.

Vishal Budhia, Chairman and Managing Director of Steamhouse India, said, “We are pretty focused in Gujarat, but parallelly, we are setting up four new projects in Gujarat.” Of these, one project will use coal and three will use waste, with each project having a capacity of 30 tonnes.

The company is also looking at opportunities outside Gujarat. It has land in Tarapur, Maharashtra, where it plans to start construction after the IPO. The project could be funded through internal cash accruals, with additional debt also being considered.

In West Bengal’s Haldia, Steamhouse India has signed an agreement with a supplier under an asset-light model. Under this arrangement, the company plans to buy steam and supply it to another industrial customer. It has also entered into a buy agreement with a large food processing company.

Budhia said the company intends to evaluate opportunities across industrial areas and estates in different parts of the country.

Steamhouse India’s ₹414 crore IPO opened for subscription on September 9, with the price band fixed at ₹77-81 per share.

The company currently has an operational capacity of 345 tonnes. It is already building another 120 tonnes of capacity in Gujarat, with 90 tonnes expected to be commissioned during calendar 2026 and the remaining 30 tonnes in the following calendar year.

In addition, Steamhouse India plans to add 180 tonnes of capacity using ₹114 crore from the IPO proceeds. This capacity is expected to be established and commissioned in FY28.

Steamhouse India supplies industrial steam and nitrogen gas to customers across chemical, pharmaceutical, pesticide, textile and tyre industries. It operates large boilers in industrial clusters and supplies steam through overhead pipeline networks.

The company’s steam pricing has a fixed and variable component. The variable component is linked to commodity prices, mainly coal, while the fixed component has an annual escalation of 3-10% to account for inflation.

This structure helps the company pass on movements in commodity prices to customers. The management said its focus is on maintaining absolute EBITDA per tonne rather than simply targeting a percentage margin.

The company also said its newer contracts generally have tenures ranging from one to 10 years. These agreements can include non-exit clauses and minimum guaranteed offtake requirements, providing greater revenue visibility.

Steamhouse India expects asset turnover to be influenced by coal prices because its steam prices are revised based on movements in coal prices.

Vaibhav Gattani, Chief Financial Officer of Steamhouse India, said, “In case the coal prices are on a higher side, the asset turn would be higher, and if it is vice versa, it would be lower. It is a mechanism of movement in coal prices, so typically around three times can be considered safe, but then it will move in tandem with the coal prices.”

For the entire discussion, watch the accompanying video

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