Motilal Oswal's research report on Aegis Logistics
Aegis Logistics (AGIS) reported a lower-than-estimated EBITDA of INR2.0b (est. INR2.3b; up 42% YoY, down 6% QoQ) due to lower volumes in 4QFY23. Gas division posted 88% YoY revenue growth in FY23 driven primarily by 61% YoY growth in sourcing volume. However, management highlighted that the sourcing division contributes very little to EBITDA due to its slender margin of ~USD1/mt. Although LPG terminalling throughput declined 11% QoQ in 4QFY23, management expects throughput to reach ~4mmt in FY24 from ~3.3mmt in FY23 driven by ramp-up of Kandla terminal. The Kandla terminal’s exit run-rate throughput stood at around 70,000mt/month at end-4QFY23. A capex program of INR45b has been planned for the JV over 2023-2027, which would be funded via internal accruals, debt, and some cash injection by both shareholders. However, such a high and ambitious capex will burden AGIS’ balance sheet, with the focus shifting away from the LPG business that may elevate uncertainty. Additionally, competitions from oil marketing companies as well as private players make the ramp-ups in LPG throughput challenging.
Outlook
The stock currently trades at 24.5x FY24E EPS of INR14. We value the stock at 22x FY25E EPS of INR15 to arrive at our TP of INR330. We maintain our Neutral rating on the stock.
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