Motilal Oswal's research report on Aegis Logistics
Aegis Logistics (AGIS) reported in-line EBITDA of INR2.1b, though its revenue was down 43% YoY due to reduced sourcing volumes and lower LPG prices in 2QFY24. However, management does not expect any significant impact of this on the company’s profit level. Throughput volumes surpassed the milestone of 1mmt in a single quarter for the first time in 2QFY24. Management expects throughput volumes to grow 20% YoY in FY24 driven by the ramp-up of Kandla terminal. A capex program of INR45b has been planned for the JV over 2023-27, which would be funded via internal accruals, debt, and some cash injections by shareholders. However, such a high and ambitious capex will burden AGIS’ balance sheet, with the focus shifting away from the LPG business, which may elevate uncertainty. Additionally, competition from oil marketing companies as well as private players makes the ramp-up in LPG throughput challenging.
Outlook
The stock currently trades at 19.5x FY25E EPS of INR14.5. We value the stock at 22x FY25E EPS to arrive at our TP of INR320. We maintain our Neutral rating on the stock.
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