Aegis Vopak Terminals IPO gets subscribed 35% on day 2; analysts flag premium valuation

The issue, with a price band of Rs 223 to Rs 235 per share, will conclude on May 28.

The company is valued at around Rs 26,000 crore at the upper end of the price band.

The IPO is entirely a fresh issue of equity shares worth Rs 2,800 crore with no offer-for-sale (OFS) component, according to the red herring prospectus (RHP).

Proceeds worth Rs 2,016 crore will be used for payment of debt, Rs 671.30 crore to fund capital expenditure for the acquisition of a cryogenic LPG terminal at Mangalore and the remaining amount will be allocated for general corporate purposes.

Aegis Vopak Terminals owns and operates storage tank terminals across India. These terminals provide secure storage facilities for liquids like petroleum, vegetable oil, lubricants, chemicals, and gases such as LPG, propane, and butane.

ICICI Securities, BNP Paribas, IIFL Capital Services, Jefferies India and HDFC Bank are the book running lead managers to the issue.

Should you apply?

Gaurav Garg of Lemonn Markets Desk said investors with a moderate to high risk appetite and a long-term horizon should consider subscribing.

"Aegis Vopak caters to approximately 11.5% of India’s LPG storage capacity and 25.5% of the third-party liquid storage market, underlining its industry leadership.

"However, investors should be mindful of several risks. At the upper price band of ₹235, the IPO is steeply valued, with an implied EV/EBITDA of 56.5x and a P/E of 227.4x, substantially higher than peers like Adani Ports (EV/EBITDA of 17.7x and P/E of 26.8x). The capital-intensive nature of the business requires continual large-scale investments, and any delays or inefficiencies in terminal commissioning could negatively impact returns. The company also faces customer concentration risk, with around 34.4% of its revenue coming from the top five clients. Furthermore, operational hazards inherent to industrial storage and handling of hazardous materials present potential financial and reputational risks.

"Investors with a moderate to high risk appetite and a long-term horizon should consider subscribing. While the high valuation limits near-term upside and listing day returns may be subdued, the medium-to-long-term growth story remains intact. As the new terminals come online starting FY26, profitability and cash flow are expected to improve, potentially driving meaningful value creation over a 2–3 year period," he said.

Meanwhile, Bajaj Broking said investors should view this IPO as a play on long-term infrastructure and energy logistics growth, but must weigh the premium valuation.

"Aegis Vopak Terminals Limited is entering the public markets with a fresh issue of Rs 2,800 crore, aiming to reduce debt and fund expansion. While the company has demonstrated a strong financial turnaround—posting a net profit of Rs 86.54 crore in FY24 after a marginal loss in FY23— the valuation requires careful consideration. Based on FY24 EPS of Re 1 and a NAV of Rs 13.27, the IPO price band of Rs 223–Rs 235 appears expensive on traditional valuation metrics like price-to-earnings, especially as a meaningful P/E cannot be derived due to the company’s recent shift to profitability. The RoNW stands at 7.51%, which is moderate when compared to peers like Adani Ports (RoNW 15.32%) and JSW Infrastructure (RoNW 14.4%)," said the brokerage.