Aegis Logistics Ltd KR Choksey Stock Recommendations
Aegis Logistics Ltd
Q3FY08 Update
Key Data
CMP Rs 202.55
Date March 31st 2008
Sector Gas Logistics
Face Value Rs.10
BSE Code 500003
52 Week H/L Rs 404 / 114
Market Cap Rs 332 Cr
Investment Rationale
Given the growing domestic consumption of petroleum and gas in the recent years, Aegis Logistics (ALL), the oil supply chain management company is well placed to grab theincreasing opportunities in this sector. ALL mainly concentrates on port handling of liquid petroleum/chemicals and gas storage and distribution. With the acquired Hindustan Aegis LPG, the company will expand its gas storage capacity at various sites which will be further used for auto gas retailing business. With the acquisition of Sealord Containers Ltd., Mumbai and the commencement of Kochi facility by March 2008, the liquid logistics capacity will increase by 75 percent to 288,000 KL. Moreover, ALL is also setting up a third terminal in Mumbai (56,000 KL) which is slated to commence operations by FY10. ALL has also acquired land in Haldia and Mangalore for setting up terminals in the near future and plans to extend its presence to Chennai and Kandla. The gas trading segment of ALL involves import and distribution of LPG from Saudi Arabia. Given the favourable cost economics of autogas over petrol and the increasing new entrants of LPG variants of cars in the market, the company is all set to scale up the autogas stations from the current 22 to 100 in the next two years. Presently, the company is focusing on Tier-II cities. ALL acquired Hindustan Aegis LPG (HAL) and issued 3.6 million new shares of Aegis to the shareholders of HAL (swap ratio – 1:3). HAL has two gas refrigerated tanks of 20,000 MT each of which one is currently operated by ALL. The strategy behind the acquisition is to increase the ALL’s gas capacity by 250,000 MT.
Key Developments
Aegis plans 70 LPG outlets in AP
Aegis Logistics is planning to set up 70 outlets of Auto Gas LPG in Andhra Pradesh. The company has chosen Keerthej Auto Gas Agency as its canvassing agent for the State. Aegis has a storage facility of 25,000 million tonnes of auto gas LPG at Moghul Trombay. The company has secured an import licence for petroleum products. The company is planning about 500 outlets across the country and of them 70 is planned in AP. The LPG would be sold at Government price.
Financial Performance
Revenue increased by 49 percent
Revenue increased by 49 percent to Rs 97 crore mainly driven by the expansion of liquid terminals at Sealord Containers and Kochi facility. Revenue from the liquid terminals rose by 66 percent to Rs 19.13 crore as against Rs 11.49 crore in the last quarter.
Valuations
At current market price of Rs 202.55, Aegis Logistics is quoting at a PER of 11x. On EV/Sales and on EV/ EBIDTA basis it is quoting at 1.26x and 9.26x of its TTM earnings respectively.
For In-depth Aegis Logistics Ltd research report by KR Choksey, company profile along with stock recommendations, Aegis Logistics Ltd target price and for making informed investment decisions Click Here.
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