Neutral Aegis Logistics; target of Rs 795: Motilal Oswal

Motilal Oswal's research report on Aegis Logistics

AEGIS has recently filed DRHP with SEBI for the IPO of Aegis Vopak Terminals Limited (AVTL), a JV with Vopak. In the conference call, management noted: 1) the IPO comprises a fresh issue of equity shares (FV INR10) of up to INR35b, 2) IPO proceeds will be used primarily to reduce debt, and 3) the equity issue will be in two phases and both partners will equally infuse equity. In 2QFY25, AEGIS reported EBITDA of INR2.2b (up 8% YoY), missing our estimate by 17% as normalized EBITDA of Liquid/Gas divisions came in 19%/16% below our estimates. Management has re-iterated its PAT guidance of 25% CAGR over the next three years, primarily led by robust upcoming capacities. AEGIS also announced that capacity expansions at Mangalore and Pipavav are nearing completion and the greenfield expansion at JNPT is nearing commissioning.

Outlook

We estimate a 13% CAGR in EPS over FY24-27E. However, the current valuations at FY26E PE of 36x and PB of 5.6x (FY26 ROE: 16.3%) are expensive. Hence, we maintain our Neutral rating on the stock with a TP of INR795, based on 35x Dec’26E EPS of INR22.7.

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