Aegis Logistics Ltd. share price target

3 February 2020 3QFY20 revenues were 13% higher than est. at INR21.7b (+64% YoY), led by boost in gas business revenues (LPG logistics volumes up 68% YoY and 28% QoQ). According to management, AGIS is expected to see gas throughput jump ~2.0mmtpa over the next two years (on base of 2.5mmtpa in FY19). We remain positive on the companys gas division and reiterate The company has recognized ESOP expenses of INR0.4b (in addition to INR1.5b in 2QFY20), which led to EBITDA miss of 18% at INR1.1b (v/s gain of INR0.9b in 3QFY19). Adjusting for the ESOP, EBITDA was 14% higher than est. The company has also taken INR20m provision for commissions to the Managing Director (totaling to INR60m for 9MFY20) in other expenses.

27 November 2019 Oil & Gas Over FY11-19, LPG consumption in India registered ~7% CAGR while LPG imports clocked ~14% CAGR over the same period. LPG demand in India is expected to grow from ~23mmt in FY19 to ~40mmt in FY35 (a conservative estimate) supported by increased LPG penetration in the country and rise in average consumption per household. With Indian refiners moving towards increasing yields of higher value added products, LPG production is expected to lag the incremental demand. We estimate LPG imports to register ~6-7% CAGR over FY20-35. The company expects to push gas through its Mumbai terminal starting Jan20, which should aid additional throughput of ~400-500,000mtpa (taking the total throughput to 1.2mmtpa). A new LPG project at Kandla with static capacity of 45,000mt is expected to be completed by 4QFY21. Throughput of ~700,000mtpa is expected in the first full year of operation (i.e.

cording to industry reports, global LPG market is expected to grow at a CAGR of 3.1% between 2019 and 2025 and reach USD 359 bn by 2025 from USD 278 bn in 2018. Asia Pacific is the leader in terms of revenue and is projected to sustain its dominance over the he forecast time period with the highest growth rate. Increasing government support for LPG adoption such as Pradhan Mantri Ujjwala Scheme (PMUY) by GOI, which recently met its...

3 July 2019 Oil & Gas LPG demand in India is expected to increase from ~23mmt in FY19 to ~40mmt in FY35 (a conservative estimate) due to (a) increased LPG penetration in the country, (b) rise in average consumption per household, and (c) growing urbanization. AGIS handled ~2.52mmt (19%) of the total ~13.2mmt (FY19) LPG imports in India. The company plans to increase its market share to ~33% by creating a network of terminals; these will focus on (a) congestion free ports with increase in throughput (turns), (b) possibility of anchoring Very Large Gas Carriers (VLGCs), and (c) adequate storage capacity and proper evacuation facility. currently contributes ~75% to the total EBITDA; gas business mix ~80% terminalling, 13% distribution and ~7% sourcing. The company enjoys EBITDA margin of ~65%, generating an IRR of ~20-25%. Such high IRR for liquids is sufficed by AGIS lower handling loss of ~0.05% as against industry norm of ~0.

(our estimate: INR0.7b), primarily driven by a rise in Gas division volumes. For FY19, sales were up 17% YoY at INR56.2b, with EBITDA at INR3.7b (+39% YoY). PAT growth was relatively lower at 12% YoY (to INR2.2b) due to higher depreciation and interest costs. Normalized Gas EBITDA up 65% YoY at INR0.9b Logistics volumes were up 47% YoY at 710kmt. For FY19, throughput was at 2.5mmt v/s 1.7mmt in FY18, led by Pipavav and Haldia ramp-up. The company handled ~19% of India's total import of 13.2mmt in FY19 and...

According to Stratistics MRC, a leading global market research company, global LPG market accounting for 285.9 mn tons in 20152015 is expected to reach 390.13 mn tons by 2022, growing at a CAGR of 4.5% during the forecast period (2015-2022).. Consumption of LPG is surging across the globe, majorly on account of rise in number of vehicles using auto gas and increasing government initiatives to boost LPG consumption, surging LPG...

We note that profitability was adversely impacted by higher lease cost at the Kandla port. Nevertheless, both the Kandla and Haldia terminals will be fully operational (at full capacity) post commissioning from 3QFY19, making vital contribution (along with Mangalore terminal) to profitability. Logistics volume growth is likely to remain strong, led by ramp-up of the Haldia and Pipavav terminals. Record-high production volumes were achieved in LPG Cylinders & Industrial LPG segment, as north-east India is witnessing strong demand for LPG. AGIS has won two tenders from IOC for sourcing of 1.5MT of LPG for 2019, and tenders from HPCL and BPCL are awaited. Pipavav terminal is likely to continue operating at 25% capacity, while Haldia terminal is expected to witness higher volumes and profitability. We believe AGIS is a key beneficiary of Indias rising LPG consumption. With ramp-up of Haldia and Pipavav LPG terminals, we expect 49% logistics volume CAGR over FY18-20.

While logistics volumes grew 25% YoY (declined 11% QoQ) to 484kmt, sourcing volumes grew 4% YoY (declined 7% QoQ) to 285kmt and distribution volumes grew 35% YoY (2% QoQ) to 21kmt. Logistics volume growth should remain strong led by the ramp-up of Haldia and Pipavav terminals. While Mumbai, Kochi and Haldia are operating at full capacity, Pipavav is operating at ~25% utilization. Profitability during the quarter was impacted because of shift in product mix. Kandla and Mangalore terminals are expected to start operations in 1QFY19 and 2QFY19, respectively. For FY18, EBITDA grew 29% to INR2.7b and PAT grew 64% to INR1.98b. Gas division EBITDA grew 32% to INR2b and Liquids division EBITDA grew 13% to INR1b. Management has recommended a final dividend of INR0.75/share, in addition to an interim dividend of INR0.5/share. We believe AGIS is a key beneficiary of Indias rising LPG consumption.

Given the various promising perspectives in AGIS' journey, we liken it to the Giant Kelp -one of the fastest growing organisms in the world and found in the waters of the Americas, South Africa, New Zealand and Southern Australia. The company's market cap has already grown ~25x over the last decade. However,we continue believing in AGIS' structural growth story with a clear focus and strong execution in a niche market. Thus, we see further upside potential led by its planned expansions. Over FY17-20, we expect AGIS to witness LPG throughput CAGR of 51%, much higher than India's estimated LPG import CAGR of 22%. Gas division EBITDA is expected to grow at 41% CAGR over FY17-20.

cing player in India. JV with ITOCHU will help Aegis in attaining cost leadership in the LPG import market, which is already looking up, thanks to slew of reforms undertaken by GOI to push...