aegis logistics limited - moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... ·...

18
1 AEGIS LOGISTICS LTD Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil products, chemicals and liquefied gases, sourcing of LPG and retailing and distribution of LPG. Company’s strategy is of building a necklace of port terminals around India’s coastline. Aegis with its strategi- cally located facilities is well placed to benefit from the rising LPG & chemical. Cur- rently Mumbai, Haldia and Kochi ports handle cumulatively ~30% of India’s POL volume and the Pipavav facility caters to the chemical belt in Gujarat. Investment Rationale Leading Liquefied Petroleum Gas (LPG) Sourcing Player with complete value chain of Gas Logistic - Aegis is India’s leading LPG sourcing company, present in the com- plete logistics value chain starting from sourcing, shipping, terminals and distribution across the industrial, commercial and auto gas segments. In order to strengthen its sourcing capabilities the company has recently tied up with one of the largest sourc- ing company in the world – Itochu. Recently, Aegis has sold19.7% stake in its wholly-owned subsidiary Hindustan Aegis LPG Company Ltd (HALPG) - under which its Haldia LPG terminal is housed - to an arm of Japanese trading company Itochu Corporation i.e. Itochu Petroleum Co (Singapore) Pte Ltd for INR 250 crore ($38.75 million) valuing HALPG at INR 1,269 crore. Aegis will use the proceeds to accelerate its capex programme for the next cycle of LPG import terminals after Haldia. Liquid terminal – cash cow which drive margin - The liquid terminal is a high margin (~50%) business for Aegis and the incremental capacity addition have help ramp up the overall profitability of the company. Aegis’s three projects in liquid terminal, which involve 100,000 kiloliters expansion in Kandla, Mangalore 25,000 kiloliters and 35,000 kiloliters in Haldia, are expected to start generating revenues and profits in the second half of the FY19, which will give significant boost to its earnings & cashflow. Valuation With major capex behind, we expect strong free cash flow generation. Going for- ward, we expect margins to remain firm with increasing proportion of high margin businesses and also expect EBIDTA of the company to grow at a CAGR of 25.2% during FY17-FY20E. At the CMP of INR 215.45, the stock is trading at EV/EBITDA and P/E of 17.4x and 22.0x respectively. We value Aegis using DCF methodology, with WACC of 13.6% and terminal growth of 3.5% to arrive at a fair value of INR 282 per share, implying an upside of 31%. Thus, we initiate coverage on this stock with a Buy recommendation. Market Data Face Value (INR) 1.0 Equity Share Capital (cr) 33.4 Share Outstanding (cr) 33.4 Market Cap (INR cr) 7,196.0 Book Value / share 36.1 Daily Avj. Volume 1,35,712 52 W High 300.8 52 W Low 170.0 Shareholding % Promoter 60.5 Foreign 11.4 Institutions 2.8 Public & Others 25.3 Sensex and Stock Movement FY 2016 FY 2017 FY 2018 FY 2019E FY 2020E Net Sales 2,213 3,930 4,791 5,898 6,956 EBDITA 194 209 274 333 410 PAT 113 133 214 253 326 EPS (INR) 3.4 4.0 6.4 7.6 9.8 P/E (x) 28.6 49.0 40.7 28.3 22.0 Dinesh Gupta +91 22 30272867 [email protected] Lohit Bharambe +91 22 30272866 [email protected] RATING: BUY Target: 282 Upside: 31% CMP : 215.45 ( As on 16/10/2018) Reuter Code : AEGS.NS Bloomberg Code : AGIS IN Source - DSPL Research, Company

Upload: others

Post on 30-Jun-2020

19 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

1

AEGIS LOGISTICS LTD

Aegis Logistics Limited

Company Profile

Aegis is a leader in terminalling of oil products, chemicals and liquefied gases, sourcing of LPG and retailing and distribution of LPG. Company’s strategy is of building a necklace of port terminals around India’s coastline. Aegis with its strategi-cally located facilities is well placed to benefit from the rising LPG & chemical. Cur-rently Mumbai, Haldia and Kochi ports handle cumulatively ~30% of India’s POL volume and the Pipavav facility caters to the chemical belt in Gujarat.

Investment Rationale

Leading Liquefied Petroleum Gas (LPG) Sourcing Player with complete value chain of Gas Logistic - Aegis is India’s leading LPG sourcing company, present in the com-plete logistics value chain starting from sourcing, shipping, terminals and distribution across the industrial, commercial and auto gas segments. In order to strengthen its sourcing capabilities the company has recently tied up with one of the largest sourc-ing company in the world – Itochu.

Recently, Aegis has sold19.7% stake in its wholly-owned subsidiary Hindustan Aegis LPG Company Ltd (HALPG) - under which its Haldia LPG terminal is housed - to an arm of Japanese trading company Itochu Corporation i.e. Itochu Petroleum Co (Singapore) Pte Ltd for INR 250 crore ($38.75 million) valuing HALPG at INR 1,269 crore. Aegis will use the proceeds to accelerate its capex programme for the next cycle of LPG import terminals after Haldia.

Liquid terminal – cash cow which drive margin - The liquid terminal is a high margin (~50%) business for Aegis and the incremental capacity addition have help ramp up the overall profitability of the company. Aegis’s three projects in liquid terminal, which involve 100,000 kiloliters expansion in Kandla, Mangalore 25,000 kiloliters and 35,000 kiloliters in Haldia, are expected to start generating revenues and profits in the second half of the FY19, which will give significant boost to its earnings & cashflow.

Valuation

With major capex behind, we expect strong free cash flow generation. Going for-ward, we expect margins to remain firm with increasing proportion of high margin businesses and also expect EBIDTA of the company to grow at a CAGR of 25.2% during FY17-FY20E. At the CMP of INR 215.45, the stock is trading at EV/EBITDA and P/E of 17.4x and 22.0x respectively. We value Aegis using DCF methodology, with WACC of 13.6% and terminal growth of 3.5% to arrive at a fair value of INR 282 per share, implying an upside of 31%. Thus, we initiate coverage on this stock with a Buy recommendation.

Market Data

Face Value (INR) 1.0

Equity Share Capital (cr) 33.4

Share Outstanding (cr) 33.4

Market Cap (INR cr) 7,196.0

Book Value / share 36.1

Daily Avj. Volume 1,35,712

52 W High 300.8

52 W Low 170.0

Shareholding %

Promoter 60.5

Foreign 11.4

Institutions 2.8

Public & Others 25.3

Sensex and Stock Movement

FY 2016 FY 2017 FY 2018 FY 2019E FY 2020E

Net Sales 2,213 3,930 4,791 5,898 6,956

EBDITA 194 209 274 333 410

PAT 113 133 214 253 326

EPS (INR) 3.4 4.0 6.4 7.6 9.8

P/E (x) 28.6 49.0 40.7 28.3 22.0

Dinesh Gupta +91 22 30272867 [email protected]

Lohit Bharambe +91 22 30272866 [email protected]

RATING: BUY

Target: 282

Upside: 31%

CMP : 215.45 ( As on 16/10/2018)

Reuter Code : AEGS.NS

Bloomberg Code : AGIS IN

Source - DSPL Research, Company

Page 2: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

2 F i -

Company Profile

Aegis Logistic Ltd (Aegis) is engaged in the terminalling of oil products, chemicals and liquefied gases, sourcing of

LPG and retailing and distribution of LPG. Aegis business can be divided into two – liquid storage and gas. Compa-

ny’s strategy is of building a necklace of port terminals around India’s coastline of India. The company operates three

gas terminals and six liquid terminals across the country.

Unique Infrastructure

Source – Company, DSPL Research

Liquid Terminal - As on August 2018

Location Capacity (in KL)

Mumbai 2,73,000

Haldia 1,20,190

Pipavaa 1,20,120

Kandla 1,00,000

Kochi 51,000

Mangalore 25,000

Total 6,89,310

Gas Terminal - As on August 2018

Location Static Capacity

in MT Throughput Capacity

in MT

Haldia 25,000 25,00,000

Mumbai 20,000 11,00,000

Pipavav 18,300 14,00,000

Total 63,300 50,00,000

Page 3: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

3

Subsidiary Companies

Key Management

Name Designation

Raj K Chandaria Chairman & Managing Director

Anish K Chandaria Vice Chairman & Managing Director

A M Chandaria Director

Kanwaljit S Nagpal Director

Raj Kishore Singh Director

Jaideep Dinesh Khimasia Independent Director

Ms. Tanvir Koreishi Independent Director

Rahul Asthana Independent Director

Murad M Moledina Chief Financial Officer

Ms. Monica Gandhi Company Secretary (Compliance Officer)

Source – Company, DSPL Research

Name of Entity Nature of Business Place of

Incorporation % of

Holding

FY 2018 Turnover Share

(%)

FY 2018 PAT Share (%)

Parent:

Aegis Logistics Standalone Terminalling,

Wholesale LPG Distribution India 100.0% 10% 47%

Subsidiaries: Foreign

Aegis Group International Pte. Limited Trading of LPG Singapore 60.0% 85% 12%

Aegis International Marine Services Pte. Limited Trading of bunker fuels Singapore 100.0% 0% 0%

Subsidiaries: Indian

Aegis Gas (LPG) Private Limited Storage services & Trading

of LPG India 100.0% 3% 26%

Sea Lord Containers Limited Storage services India 92.5% 1% 19%

Hindustan Aegis LPG Limited Storage services India 80.3% 1% 5%

Konkan Storage Systems (Kochi) Private Limited Storage services India 100.0% 0% 0%

Eastern India LPG Company Private Limited Storage services India 100.0% 0% 0%

Aegis LPG Logistics (Pipavav) Limited Storage services India 100.0% 0% 0%

Aegis Terminal Pipavav Limited Storage services India 100.0% 0% 0%

Effect of intercompany adjustments / eliminations

-9%

Source – Company, DSPL Research

Page 4: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

4

Investment Rationale

Leading Liquefied Petroleum Gas (LPG) Sourcing Player with complete value chain of Gas Logistic - Aegis is India’s

leading LPG sourcing company, present in the complete logistics value chain starting from sourcing, shipping, termi-

nals and distribution across the industrial, commercial and auto gas segments. In order to strengthen its sourcing ca-

pabilities the company has recently tied up with one of the largest sourcing company in the world – Itochu Petroleum

co (Singapore) Pte Ltd (Itochu).

Aegis operates three LPG terminals at key ports in India, with a static capacity of 63,300 mt and a throughput capaci-

ty of 50,00,000 mtpa. In the gas sourcing business the company gets a spread on $3-5 per MT. The terminal busi-

ness generates revenues of Rs 700-1,000 per MT.

India is the world’s second largest importer of LPG (liquefied petroleum gas) after China and remains ahead of Japan.

As the government’s drive to provide clean cooking fuel to millions of poor families boosted household demand by

nearly 8% in 2017-18. Further, with the rationalization of LPG subsidies resulting in a decrease in the diversion of

subsidized LPG to the transport and commercial sector. Deregulation of the oil sector will lead to new entrants in pe-

troleum retailing and bulk marketing — requiring the need for integrated logistics services. Aegis being the largest

private importer of LPG, is expected to be the biggest beneficiary of rising LPG imports in the country.

Source – Company, DSPL Research

Gas Terminal - As on March 2018

Location Static Capacity

in MT Throughput Capacity

in MT

Haldia 25,000 25,00,000

Mumbai 20,000 11,00,000

Pipavav 18,300 14,00,000

Total 63,300 50,00,000

Source – Company, DSPL Research

Page 5: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

5

Aegis distributes its gas which is used by industrial, commercial and auto users through a diversified network. The

company has 133 distributors in 45 cities across eight states, who sell commercial and industrial LPG. Commercial

gas is sold under the brand ‘Aegis Puregas’. Auto gas is sold under the brand ‘Aegis Autogas’ through 109 Auto gas

stations, which the company intends to expand to ~130 stations over the next two years. Aegis has opted for a mod-

erate pace of growth for its Auto gas venture adding one gas station every month.

Recently, Aegis has sold19.7% stake in its wholly-owned subsidiary Hindustan Aegis LPG Company Ltd (HALPG) - un-

der which its Haldia LPG terminal is housed - to an arm of Japanese trading company Itochu Corporation i.e. Itochu

Petroleum Co (Singapore) Pte Ltd for INR 250 crore ($38.75 million) valuing HALPG at INR 1,269 crore. Aegis will

use the proceeds to accelerate its capex programme for the next cycle of LPG import terminals after Haldia.

We expect gas sourcing and retail & distribution segment to grow at steady pace, with the commissioning of Haldia and Pipavav terminals will start reflecting in its financials. We expect revenues from the gas business to grow at CAGR of 19.3% over FY17-20E to INR 6,763 crore from the current INR 3,776.4 crore (FY17). Although the revenue growth is expected to be more or less in-line with the domestic demand, the change in the revenue mix within this divi-sion should ensure that the EBITDA improves as the contribution of the value added gas distribution business grows.

Source – PPAC, DSPL Research

Source – Itochu presentation, DSPL Research

Shareholding of ITOCHU in Aegis Subsidiary

Page 6: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

6

Liquid terminal – cash cow which drive margin

Aegis handles petroleum and other chemicals at its liquid terminals. It operates six liquid terminals that are strategical-

ly located at Mumbai, Kochi, Haldia Pipavav, Kandla and Mangalore, with a total capacity of 689,310 KL. These liq-

uid terminals are well connected to its major client i.e. oil marketing companies (OMC) through pipelines. Liquid ter-

minals are offered on long-term and spot contracts.

Source – Company, DSPL Research

Source – Company, DSPL Research

Liquid Terminal - As on August 2018

Location Capacity (in KL)

Mumbai 2,73,000

Haldia 1,20,190

Pipavaa 1,20,120

Kandla 1,00,000

Kochi 51,000

Mangalore 25,000

Total 6,89,310

Page 7: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

7

Aegis erects liquid storage tanks at a port, which can store a variety of liquids like chemicals and oils & rents them out.

In this business, economies of scale & operational efficiency is very critical in maintaining a low cost of service model

which is incurred by years of experience.

Petroleum, Oil & Gas, Lubricant & Liquid (POL) traffic in India has been growing at a healthy rate. Given the fact that

the existing ports of Mumbai, Haldia, Kandla and Kochi cumulatively handle ~56% of India’s POL volume and the

Pipavav facility caters to the chemical belt in Gujarat, we believe that Aegis facilities will always be in demand. As a

long term strategy, the company intends to set up facilities where the requirement for liquid storage solutions is high.

The liquid terminal is a high margin (~50%) business for Aegis and the incremental capacity addition have help ramp

up the overall profitability of the company. Aegis’s three projects in liquid terminal, which involve 100,000 kiloliters

expansion in Kandla, Mangalore 25,000 kiloliters and 35,000 kiloliters in Haldia, are expected to start generating

revenues and profits in the second half of the FY19, which will give significant boost to its earnings & cashflow.

With the commissioning of its new liquid terminal during second half of FY19, we expect revenue from liquid terminal division to grow at a CAGR of 7.8% over FY17-20E to INR 193.0 crore led by the higher throughput and capacity utilization.

Page 8: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

8

Financial Performance

Aegis’s financial performance is linked with the overall demand of the oil and gas industry in India. We see Aegis as a

beneficiary of rising domestic demand of gas, due to its location advantage & strong relationship with major OMCs in

the country. With the commissioning of its new liquid terminal by second half of FY19, we expect revenue from liquid

terminal division to grow at a CAGR of 7.8% over FY17-20E to INR 193.0 crore led by the higher throughput and

capacity utilization.

We expect revenues from the gas business to grow at CAGR of 21.4% over FY17-20E to INR 6,762.7 crore from the

current INR 3,776.4 crore (FY17) spearheaded by the lucrative and high margin gas distribution sub division. Alt-

hough the revenue growth is expected to be more or less in-line with the domestic demand, the change in the revenue

mix within this division should ensure that the EBITDA improves as the contribution of the value added gas distribution

business grows.

Source – Company, DSPL Research

Page 9: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

9

With major capex behind, we expect strong free cash flow generation of ~INR 100 crore (average) over FY19-20E.

RoE/RoCE is expected to improve sharply from 15.9%/12.3% in FY17to 18.3%/17.8% in FY20E.

Valuation

Aegis is a leader in terminalling of oil products, chemicals and liquefied gases, sourcing of LPG and retailing and dis-

tribution of LPG. Company’s strategy is of building a necklace of port terminals around India’s coastline. Aegis with its

strategically located facilities is well placed to benefit from the rising LPG & chemical. Currently Mumbai, Haldia and

Kochi ports handle cumulatively ~30% of India’s POL volume and the Pipavav facility caters to the chemical belt in

Gujarat. With major capex behind, we expect strong free cash flow generation. Going forward, we expect margins to

remain firm with increasing proportion of high margin businesses and also expect EBIDTA of the company to grow at

a CAGR of 25.2% during FY17-FY20E. At the CMP of INR 214.9, the stock is trading at EV/EBITDA and P/E of 17.4x

and 22.0x respectively. We value Aegis using DCF methodology, with WACC of 13.6% and terminal growth of 3.5%

to arrive at a fair value of INR 282 per share, implying an upside of 31%. Thus, we initiate coverage on the stock with

a Buy recommendation.

Source – Company, DSPL Research

Aegis DCF Valuation

Particular FY19E FY20E FY21E FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E

Cash from operations 139 264 273 283 293 303 314 325 336 348 360

Less: Capex -75 -75 -35 -35 -35 -35 -35 -35 -35 -35 -35

Free cash flow 64 189 238 248 258 268 279 290 301 313 325

Year - 1 2 3 4 5 6 7 8 9 10

Discount factor 1.00 0.88 0.77 0.68 0.60 0.53 0.46 0.41 0.36 0.32 0.28

PV (FCF) 64 166 185 169 155 142 130 118 108 99 91

Source – DSPL Research

Page 10: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

10

Key Risk

Currency volatility

Fluctuation in Gas & Oil price

Change in government regulation

Slow down in demand

WACC Calculation

Risk-free rate 8.0%

Risk premium 5.5%

Beta 1.2

Cost of equity 14.6%

After-tax cost of debt 7.0%

Debt/Equity 0.23

WACC 13.6%

Terminal growth rate 3.5%

DCF Valuation - Valued at the end of FY20E

Terminal cash flow (INR cr) 1,426

Terminal growth rate 3.5%

Terminal value (INR Cr) 14,573

PV (Terminal Value) 4,061

PV (CF over FY19-29E) 5,487

Enterprise value (INR cr) 9,548

Net debt (INR cr) 120

Equity value (INR cr) 9,427

Equity Shares (m) 33

Target Price 282

Source – DSPL Research

Page 11: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

11

Source - Petroleum Planning and Analysis Cell (PPAC), DSPL Research

LPG Industry Overview

Liquefied Petroleum Gas (LPG) is a flammable mixture of various hydrocarbons, and majorly consists of propane and

butane. LPG gas is colorless & odorless; and emits less quantity of CO2 when compared to petrol or diesel. Thus, LPG

is extensively used as a cooking fuel, both in commercial and residential setups throughout the country. Application of

LPG in the industrial sector is also increasing, owing to growing use of LPG as a feedstock in petrochemical plants in

the country. Moreover, rising demand from transport segment and increasing consumption of LPG to produce various

chemical components such as propylene, ethylene, butadiene etc., is further anticipated to boost demand for LPG in

the country in the coming years.

India’s LPG Market :

India is the second largest global importer of LPG catering up to12% of total global demand as compared to China,

the largest global importer up to 21% of total global demand, Japan at 10% and South Korea at 7% in 2017 (source:

Poten & Partners). LPG consumption increased over the years in India from 13,135 thousand MT in FY10 to 23,343

thousand MT in FY18(P) on the back of Government’s thrust on reaching clean cooking fuel to all sections of the soci-

ety. LPG consumption was catered 47% through net import and 53% through domestic supply in FY18(P). Net import

share in LPG consumption increased from 20% in FY10 to 47% in FY18(P) against this domestic supply share reduced

from 80% to 53% over the years.

Source - Petroleum Planning and Analysis Cell (PPAC), DSPL Research

LPG consumption Mix :

Out of total LPG consumption in India, LPG-Packed Domestic contributed largest pie with 1,840.8 thousand MT at

87.4%, LPG – Packed Non-Domestic (Commercial) usage stood at 197 thousand MT at 9.3% share, LPG-Bulk

(Industrial) with 26.1 thousand MT at 1.2% and Auto LPG at 16.1 thousand MT at 0.8% in August 2018. Out of five

regions, North region had the largest share in LPG consumption of 30.1% followed by South region at 28.5%, West

region at 22.9%, East region at 16.1% and North East region at 2.4% in August 2018.

Page 12: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

12

LPG Region Wise Penetration :

LPG penetration at All India level stood at 84.3% as on July 2018. Maximum LPG penetration was across South re-

gion at 97.1% and North at 95.1%, meanwhile penetration across West, North East and East regions remained at

77.3%, 70.4% and 67.7% respectively as on July 2018. Lower penetration across West, North East and East regions is

set to drive most of the LPG demand in coming years.

Per capita sales of LPG across All India level stood at 17.5 kg in FY17. Per capita sales of LPG for South and North

regions remained above All India level at 24.2 kg and 18.2 kg in FY17, respectively. At the same time, East and North

East regions’ per capita sales of LPG were 11.5 kg and 10.5 kg in FY17, respectively. Meanwhile, per capita sales of

LPG for West region stood 17.5 kg in FY17.

Source - Petroleum Planning and Analysis Cell (PPAC), factly.in, DSPL Research

Government schemes to fuel growth :

The government is focused in promoting LPG as a reliable fuel through schemes such as Pahal, Ujjwala, Direct Benefit

Transfer and 'Give it Up' which led to increased adoption of LPG in residential segment. Under the Ujjwala scheme

free LPG connections will be provided to 5 crore poor households by 2019.

Page 13: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

13

Source - Indian Ports Association, DSPL Research

There are 12 major and about 200 minor & intermediate ports including 69 operational non-major ports, spread

across 7,517 km coastline of India. Indian ports have about total capacity 1,765 million MT, comprising Major ports

(1,065 million MT) and non-major ports (700 million MT). Total Indian ports capacity is expected to be augmented to

2,500 million MT by 2025.

Ports handle almost 95% of total international trade volume in India. Currently, the proportion of merchandize trade in

Gross Domestic Product (GDP) of India is 27.5% and USD 623 billion in value terms (as per World Bank- 2016).

Volume handled by Major ports increased by 6.9% to 468.4 million MT and Non-major ports rose by 4.1% to 485.2

million MT in FY17. Share of volume handled by Non-major ports out o total traffic has increased from 34% in FY10

to 42.8% in FY17. This can be attributed to the strategic location, modernized infrastructure and efficient operations of

non-major ports.

Ports Industry Overview

Commodity wise traffic across major ports :

The largest share in total cargo handled across major Indian ports was of Petroleum, Oil and Lubricants (POL) which

accounted for 32.8%, followed by Other Cargo (21.2%), Container (19.2%), Coal (18.1%), Iron Ore (6.6%) and Ferti-

lizer (2.2%) in FY17.

Source - Indian Ports Association, DSPL Research

Page 14: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

14

Source - Indian Ports Association, DSPL Research

POL (Petroleum, Oil and Lubricants) traffic :

POL (Petroleum, Oil and Lubricants) traffic across major Indian ports increased by 8.1% to 212.37 million Tonnes in

FY17 from 196.42 million Tonnes in FY16. POL traffic across major Indian ports rose by CAGR 2.8% in FY11-FY17.

Majority of POL & other Liquids traffic are being handled thorough Kandla (28%), Mumbai (15%), Pradip (14%), New

Mangalore (10%) and Cochin (9%) for the period April to August 2018.

Factors catering growth towards Ports Industry

Improving efficiency:

Average Turnaround Time of Major Indian Ports has improved from 4.63 days in FY10 to 2.11 days in FY17. Lowering

of the turnaround time signifies a sharp improvement in operational efficiency across major Indian ports in last eight

years. As per the OECD (Organisation for Economic Co-operation and Development) 2014 study, the average ship

turnaround time of world container ports was 1.03 days in 2014 with most ports achieving average ship turnaround

times lower than two days. Asian ports had a turnaround of less than one day, Japan had half a day, etc. Ports in Afri-

ca have generally longer ship turnaround times, their average turnaround time is more than three days.

Source - CARE Ratings Report, DSPL Research

Page 15: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

15

LPI (Logistics Performance Index) :

LPI (Logistics Performance Index) is the benchmarking tool created to help countries identify the challenges and oppor-

tunities they face in their performance on trade logistics and what they can do to improve their performance. As per the

latest LPI statistics, India ranks at 44th among 160 countries in 2018. Germany, Japan, Singapore, UK, US and China

ranks at 1st, 5th, 7th, 9th,14th and 26th position respectively in 2018. (source: https://lpi.worldbank.org/

international/global)

Government push towards Ports sector :

The concept of Sagarmala Project came in to address infrastructural & operational challenges of Indian ports and im-

prove last mile connectivity to the ports. There are about 415 projects at an approximate investment of INR 8 lakh

crore initiated across port modernization, new port development, port connectivity enhancement, port link industrializa-

tion and coastal community development for phase wise implementation over the period if 2015-2035.

Source - CARE Ratings Report, DSPL Research

Page 16: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

AEGIS LOGISTICS LTD

16

Source - DSPL Research

Financials - Consolidated (in INR Cr.)

Profi t & Loss Statement FY2018 FY2019E FY2020E

Net Sales 4,791.0 5,897.7 6,955.7

To tal Revenue 4,791.0 5,897.7 6,955.7

Raw Material Cost 4,354.5 5,361.1 6,308.8

Gross Pro fi t 436.4 536.7 646.9

Employee Cost 47.1 59.0 69.6

Other Manufacturing Cost 123.4 150.4 173.9

Operating EB ITDA 266.0 327.3 403.4

Op. EBITDA Margin (%) 5.6% 5.5% 5.8%

Other Income 8.4 5.9 7.0

Deperication 34.3 36.5 38.4

EB IT 240.0 296.7 371.9

EBIT Margin 5.0% 5.0% 5.3%

Finance Cost 15.2 15.1 9.3

Exceptional Item - - -

PBT 224.8 281.6 362.7

Tax 11.0 28.2 36.3

Share of minority & Associate - - -

PAT 213.8 253.5 326.4

Share O/S (in cr) 33.4 33.4 33.4

Basic EPS (INR) 6.4 7.6 9.8

Diluted EPS (INR) 6.4 7.6 9.8

Cash EPS (INR) 7.4 8.7 10.9

Balance Sheet FY2018 FY2019E FY2020E

Share Capital 33.4 33.4 33.4

Reserves and Surplus 1,173.9 1,396.1 1,685.8

Shareholders Fund 1,207.3 1,429.5 1,719.2

Minority Interest 69.7 69.7 69.7

Total Loan 282.4 232.4 132.4

Deferred Tax Liailities 70.5 70.5 70.5

To tal Liabi l i t ies 1,629.9 1,802.1 1,991.7

Net Fixed Assets 1,406.7 1,445.2 1,481.8

Deferred Tax Assets 64.95 64.95 64.95

Goodwill 1.25 1.25 1.25

Inves tments 0.0 0.0 0.0

Sundry Debtors 346.9 452.4 571.7

Cash & Bank 162.0 129.6 172.8

Loans & Advances - - -

Inventories 26.0 80.8 114.3

Other Current Assets 206.1 251.6 295.1

To tal Current Assets 741.0 914.4 1,153.9

Sundry Creditors 378.8 404.0 476.4

Provision 13.5 16.6 19.6

Other Current Liabilities 191.8 203.2 214.2

To tal Current l iabi l i t ies & Provis ion 584.1 623.8 710.2

Net Assets 156.9 290.6 443.7

To tal Assets 1,629.9 1,802.1 1,991.7

Cashflow Statement FY2018 FY2019E FY2020E

PBT 224.8 281.6 362.7

Depreciation & Amortization 34.3 36.5 38.4

Finance Cost 15.2 15.1 9.3

Others (6.0) - -

(Incr)/Decr in Working Capital (19.2) (166.1) (109.9)

Tax Paid (57.7) (28.2) (36.3)

Cash Flow from Operating 191.5 139.0 264.2

(Incr)/ Decr in Gross PP&E (299.1) (75.0) (75.0)

Others 3.0 - -

Cash Flow from Inves ting (296.2) (75.0) (75.0)

Proceeds from issue of Shares & Warrants 239.3 - -

(Decr)/Incr in Debt 17.5 (50.0) (100.0)

Interest Paid (31.3) (15.1) (9.3)

Others - - -

Dividend Paid (41.3) (31.2) (36.7)

Cash Flow from Financing 184.2 (96.3) (146.0)

Incr/(Decr) in Balance Sheet Cash 79.5 (32.4) 43.2

Cash and cash equivalents op. bal 15.4 94.9 62.5

Other Bank Balances 67.1 67.1 67.1

Cash and cash equivalents cl . Bal 162.0 129.6 172.8

Ratios Analys is FY2018 FY2019E FY2020E

Per Share Value

EPS (Rs) 6.4 7.6 9.8

BVPS (Rs) 36.1 42.8 51.5

DPS (Rs) 0.9 0.9 1.0

Turnover Ratio

Inventory Days 2 3 5

Debtors Days 40 25 27

Creditors Days 40 24 23

Cash Conversion Cycle 2 4 9

Asset Turnover Ratio 2.2 2.4 2.6

Pro fi tabi l i y Ratio

EBITDA Margin 5.7% 5.7% 5.9%

PAT margin 4.5% 4.3% 4.7%

ROA 9.7% 10.4% 12.1%

ROE 17.7% 17.7% 19.0%

ROCE 14.7% 16.5% 18.7%

Solvency Ratio

Debt / Equity Ratio 0.2 0.2 0.1

Current Ratio 0.8 0.8 1.1

Quick Ratio 0.8 0.7 0.9

Interest Coverage Ratio 18.0 22.1 44.3

Valuation Ratios

PE (x) 40.7 28.3 22.0

P/B (x) 7.2 5.0 4.2

EV/EBITDA (x) 32.0 21.8 17.4

Mcap/Sales (x) 1.8 1.2 1.0

Earning Yield (%) 2.5% 3.5% 4.5%

Dividend Yield (%) 0.3% 0.4% 0.5%

Free Cash Flow Yield (%) -1.6% 0.9% 2.6%

Page 17: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

17

DISCLOSURE

We/I, Dineshkumar Gupta, M. Sc, Lohit Bharambe, BE, PGPM, as author / the name subscribed to this report, hereby certify that all of the views expressed in this re-search report reflect my / our personal views about the subject or securities and no part of my / our compensation was / is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.. We / I or my / our relative(s) or Research Entity does not have any financial interest in the subject company other than disclosed.

Investment Rating

Expected return (Over 1 year)

Buy > 15%

Hold > -10% to 15%

Sell < -10%

Not Rated We have forward looking estimates for the stock but we refrain

from assigning recommendation

Business activity of the research entity Stock Broker, Merchant Banker, Depository Participant, Mutual Fund Distribu-tor

Disciplinary history of the research entity Nil

Terms & Conditions for offering Research Report by research entity On principal, we do not sell our research reports. The Research Report should be kept confidential. The Research Report is published with honesty and in good faith. The Research Report is prepared after thorough analysis of the Stock Market. Research analyst or research entity shall effectively address conflict of interest which may affect the impartiality of its research analysis and research report and shall make appropriate disclosures to address the same. Research analyst or research entity or any employees will not engage in insider trading or front running or front running of its own research report. Research analyst or research entity shall comply with all regulatory requirements applicable to the conduct of its business activities. Research analyst or research entity or its employees engaged in research analysis shall observe high professional standard while preparing research report.

Details of associate of research entity

Dalgreen Agro Pvt. Ltd.

Visual Estates Pvt. Ltd.

DSPL Investments Pvt. Ltd.

Chanda Bharech Beneficiary Trust

VSN Enterprises

Dalmia Investmart Pvt. Ltd.

Dalmia Devcon Pvt. Ltd.

Gita Dalmia Family Trust

Narain Prasad Dalmia HUF Damia Devcon Pvt. Ltd.

Namtech Commercial LLP.

Dalmia Janakalyan Kosh

Sweta Beneficiary Trust Suryakant Dalmia HUF Mount Intra Finance Pvt. Ltd.

Vaishnawi Housing Pvt. Ltd.

Avni Beneficiary Trust

Dalmia Securities Pvt. Ltd.Employees Gratuity

Fund

Mount Intra Properties Pvt Ltd.

Advay Beneficiary Trust

Dalmia Commodities Pvt Ltd

DISCLOSURE OF INTEREST: Whether the research analyst or his relative or research entity or his associate has any financial interest in the subject com-pany and the nature of such financial interest. □ Yes √ No

Whether the research analyst or research entity or its associates or relatives, have actual / beneficial ownership of one per cent or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report;

□ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation from the subject compa-ny in the past twelve months; □ Yes √ No

Whether the research analyst or research entity or its associates have managed or co-managed public offering of securi-ties for the subject company in the past twelve months; □ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; □ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;

□ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation or other benefits from the subject company or third party in connection with the research report; □ Yes √ No

Whether the research analyst has served as an officer, director or employee of the subject company; □ Yes √ No

Whether the research analyst or research entity has been engaged in market making activity for the subject company. □ Yes √ No

Other Material Conflict of Interest, if any NIL

The definition of the terms used in making recommendations are available at http://www.dalmiasec.com/Pdf/Abbreviation.pdf. These terms have been consistently used throughout the Re-search Reports contained herein.

Trading Rating Expected return (less than1 year)

Buy > 5%

Hold > -5% to 5%

Sell < - 5%

Page 18: Aegis Logistics Limited - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2018/10/... · Aegis Logistics Limited Company Profile Aegis is a leader in terminalling of oil

18

DISCLAIMER

DISCLAIMER

This report has been prepared by M/s Dalmia Securities Pvt. Ltd. (hereinafter referred as DSPL, SEBI Registered Research Ana-lyst) and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such infor-mation has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and DSPL is not soliciting any action based upon it. Before acting on any advice or recommen-dation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. DSPL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the loss-es or the damages sustained due to the investments made or any action taken on basis of this report, including but not restrict-ed to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. Past performance is not a guide for future performance. Investors are advised to see Risk Disclosure Document of each product before investing. DSPL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the rec-ommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.

DSPL is registered under SEBI (Research Analyst) Regulations, 2014 vide Registration No INH300003066 dated 30.05.2016