Hilltone Software and Gas Limited has announced a strategic expansion of its Industrial Gases vertical through partial utilization of funds received from its recent preferential allotment. The company plans to broaden its product portfolio by adding Carbon Dioxide and Argon gases to its existing Industrial and Medical Oxygen and Nitrogen gases business.

Preferential Allotment and Funding Background

The expansion follows the company's completion of a preferential allotment in December 2025. The Board had previously indicated that proceeds from the preferential issue would be utilized for business expansion and infrastructure development for the Gases Vertical.

Proposed Infrastructure Investment

The expansion involves significant capital investment in infrastructure and equipment to support the new gas production capabilities. The company will transition from its current trading model to in-house production and bottling operations.

Strategic Rationale and Expected Benefits

Currently, the company operates as a trader for Carbon Dioxide and Argon gases, procuring cylinders from third-party suppliers. This model presents several operational challenges including lower profit margins, supply inconsistencies, and limited sourcing control.

The new infrastructure investment is expected to deliver substantial operational and financial improvements:

• Improved supply reliability and better customer servicing capability
• Enhanced control over procurement and distribution processes
• Opportunity to expand the existing customer base
• Gross profit margin improvement of approximately 25% in the Industrial Gases vertical
• Logistics cost reduction of approximately 15% through the truck-mounted liquid gas tank acquisition

Existing Operations and Market Position

Hilltone Software & Gases Limited has established a strong presence in the industrial gases sector over 15 years, operating primarily in Gujarat. The company has built a loyal customer base through its bottling and supply operations for Industrial and Medical Oxygen and Nitrogen gases.

The company operates through three distinct business verticals:

• Industrial and Medical Gases – Located in Village Santej, Gujarat
• Eco Solutions – Manufacturing energy-saving devices including Heat Exchangers and Dry Coolers in Tehsil Badli, Haryana
• Tech Solutions – IT consultancy, software products, and maintenance services based in Mehsana, Gujarat

Implementation Timeline

Orders for the liquid tanks, cylinders, and truck-mounted tank have been placed. The company expects to complete installation and commissioning by May 2026, after which bottling operations for Carbon Dioxide and Argon gases will commence. This expansion aligns with the company's broader strategy of infrastructure strengthening, cost optimization, and margin enhancement in its core Industrial Gases vertical.

Hilltone Software & Gases Limited announced its unaudited standalone financial results for the quarter ended December 31, 2025, demonstrating strong operational performance across key financial metrics. The Board of Directors approved these results during their meeting held on February 12, 2026, at the company's registered office.

Financial Performance Overview

The company delivered impressive financial results for Q3FY26, showing significant improvement across revenue and profitability metrics compared to the corresponding period last year.

Quarterly Performance Analysis

The company's revenue from operations reached ₹663.55 lacs in Q3FY26, representing a substantial increase from ₹140.29 lacs in the same quarter of the previous year. Total expenditure for the quarter was ₹561.83 lacs, resulting in a profit from operations of ₹101.72 lacs before other income and interest.

Other income contributed ₹10.67 lacs to the overall performance, while financial costs remained controlled at ₹2.33 lacs. After accounting for tax expenses of ₹11.34 lacs, the company achieved a net profit of ₹98.72 lacs for the quarter.

Nine-Month Performance

For the nine months ended December 31, 2025, the company reported net sales of ₹1,241.85 lacs compared to ₹544.19 lacs in the corresponding period of the previous year. Net profit for the nine-month period stood at ₹41.85 lacs against ₹30.80 lacs in the previous year.

Segment-wise Performance

The company operates across three main segments: gases, engineering department (heat exchanger), and software. For Q3FY26, the engineering department contributed significantly with revenue of ₹532.72 lacs, while the gases segment generated ₹130.82 lacs. The engineering department showed strong profitability with a segment result of ₹95.99 lacs.

Capital Structure

The paid-up equity share capital increased to ₹1,317.78 lacs as of December 31, 2025, from ₹1,093.08 lacs in the previous year, reflecting the company's capital expansion initiatives.

Regulatory Compliance

The financial results were prepared in accordance with Indian Accounting Standard 34 (Ind AS 34) for interim financial reporting and comply with Regulation 33 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The statutory auditors Ashvin K. Yagnik & Co. conducted a limited review of the standalone financial results and provided an unqualified review report.