Aegis Logistics Limited — Q1 FY25 earnings call

Call held 31 Jul 2024

Management summary

Aegis Logistics delivered a record-breaking first quarter for FY25, characterized by strong volume growth in LPG logistics and significant margin expansion in the liquid storage segment. Management expressed high confidence in their 25% CAGR growth target, backed by a massive ₹4,500 crore capex pipeline. While the distribution segment faced short-term headwinds from natural gas pricing, the core terminaling business remains robust with major expansions in Mangalore and Pipavav on track for FY26 commissioning.

Highlights

  • Reported highest-ever Q1 EBITDA of ₹250 crores, representing an 18% YoY growth.

  • Profit After Tax (PAT) increased by 19% YoY to ₹158 crores.

  • Liquid division operating EBITDA grew significantly by 38% YoY to ₹108 crores.

  • LPG logistics throughput volumes reached a record 10.12 lakh metric tons, up 15% YoY.

  • Reiterated guidance of 25% CAGR over the next 3 years supported by new capacity.

  • Announced a new liquid storage terminal in Mumbai with 150,000 kiloliters capacity at a cost of ₹250 crores.

  • Capital expenditure program of ₹4,500 crores by FY27 is 50% complete or in progress.

  • LPG distribution volumes saw a temporary dip to 1.29 lakh metric tons due to aggressive natural gas pricing by competitors.

Key financials

  1. EBITDA ₹250 Cr +18%YoY
  2. Profit After Tax ₹158 Cr +19%YoY
  3. EPS ₹3.75 +14%YoY
  4. Liquid Division EBITDA ₹108 Cr +38%YoY
  5. LPG Division EBITDA ₹142 Cr +7%YoY

What they filed

Q1 FY27: revenue up 27.7%, net profit up 471.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue658 672 914 837 1,028 +56%914 +36%1,713 +87%1,069 +28%
EBITDA67 63 246 67 79 +18%89 +41%416 +69%469 +600%
Net profit72 66 226 69 167 +132%183 +177%524 +132%394 +471%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Operating EBITDA
₹250 Cr Total
  • LPG Division ₹142 Cr 56.8%
  • Liquid Division ₹108 Cr 43.2%

Guidance & targets

Profitability

  • EBITDA CAGR Profitability · next 3 years · High confidence 25%
    The outstanding Q1 performance strengthens our confidence in meeting our guidance of achieving a 25% CAGR over the next 3 years.

    — Raj Chandaria, Chairman and Managing Director

Capex

  • Total Capital Expenditure Capex · by FY27 · High confidence ₹4,500 crores
    Now you may recall, we announced a capital expenditure program of INR4,500 crores by FY'27 and nearly 50% of this is already completed or currently in progress.

    — Raj Chandaria, Chairman and Managing Director

  • Annual Capex Run-rate Capex · beyond FY27 · Medium confidence ₹1,000 crores+

    Previously ₹900 crores → ₹1,000 crores+

    probably the pace which is INR1,000 crores plus every year would continue beyond FY '26 and FY '27 also in view of the projects that are under pipeline.

    — Murad Moledina, CFO

Capacity

  • Mumbai Liquid Storage Terminal Capacity · FY26 · High confidence 150,000 kiloliters
    And we plan to build a storage terminal with a capacity of about 150,000 kiloliters on this site with an estimated project cost of INR250 crores.

    — Raj Chandaria, Chairman and Managing Director

Volume

  • LPG Throughput Growth Volume · FY25 · High confidence 25%
    And as I said, we expect 25% increase in throughput for FY '25, 25% growth over the previous year anyways.

    — Murad Moledina, CFO

Risks & concerns

  • Competition from new LPG terminals at JNPT

    medium

    Management argues that LPG demand is growing at 5-7% CAGR (2 million tons/year), creating space for all players, and emphasizes their operational expertise.

    Analyst downplayed

  • Natural Gas Price Volatility

    low

    Aggressive pricing by gas utilities can temporarily shift industrial users away from LPG/Propane.

    Management acknowledged

  • Project Execution and Commissioning Timelines

    low

    While on track, the 25% CAGR guidance is heavily dependent on the timely commissioning of Pipavav and Mangalore terminals in Q1 FY26.

    Management acknowledged

Areas of evasion (2)

  • Specific details on the potential IPO or capital raise for the AVTL JV.
  • Detailed breakdown of standalone vs consolidated profit discrepancies beyond accounting standards.

Q&A highlights

2 direct, 1 evasive
Impact of Natural Gas Pricing on LPG Distribution Direct
It was a very kind of suicidal attempt by Gujarat Gas to lower down natural gas prices so low... But now I think July, again, natural gas prices have risen by INR2 which is substantial.

Explains the temporary volume dip in the distribution segment and confirms the reversal of the competitive pricing threat.

Asked by Chirag Vekariya

Competitive Advantage at Mangalore Port Direct
What we bring on the table here is a cryogenic terminal of 82,000 metric tons which can unload 2 VLGCs at a time... whereas [competitors] are spheres, they are very low unloading rate.

Highlights the massive efficiency gap between Aegis's upcoming cryogenic terminal and existing pressurized terminals, which should drive market share gains.

Asked by Priyankar Biswas

Capital Raising at Subsidiary (AVTL) vs Holdco Evasive
Noted, but this is too premature discussion... whatever path we choose, we will come out with our reasoning for the same.

Investors are concerned about potential value leakage or confusion if capital is raised at the JV level rather than the listed parent company.

Asked by Anil Sarim

2 min read 5 chapters

Detailed narrative

Record Financial Performance and Segment Dynamics

Aegis Logistics achieved its highest-ever Q1 EBITDA of ₹250 crores, driven by a 38% surge in the liquid division's EBITDA to ₹108 crores. The LPG logistics segment also performed strongly, with throughput volumes rising 15% YoY to 10.12 lakh metric tons. However, the LPG distribution segment faced a temporary headwind, with volumes dropping to 1.29 lakh metric tons as industrial customers in the Morbi cluster shifted to natural gas due to 'suicidal' pricing by Gujarat Gas. Management noted that natural gas prices have already begun to rise in July, which should normalize LPG distribution volumes in the coming quarters.

Aggressive Expansion and Capex Roadmap

The company is halfway through its ambitious ₹4,500 crore capex program slated for completion by FY27. Key projects include the expansion of LPG capacity at Pipavav (45,000 metric tons) and Mangalore (85,000 metric tons), both expected to be commissioned in Q1 FY26. Additionally, Aegis announced a new ₹250 crore liquid storage terminal in Mumbai with 150,000 kiloliters of capacity. Management signaled that the capex run-rate might increase from ₹900 crores to over ₹1,000 crores annually beyond FY27 as they explore further opportunities in the pipeline.

Strategic Pivot to Ammonia and Sustainable Fuels

Aligning with India's energy transition, Aegis is diversifying into ammonia logistics. The company plans to commence construction of its first ammonia terminal in Gujarat during this fiscal year. Management's goal is to become vertically integrated in the ammonia business, similar to their successful LPG model. They are also exploring opportunities for an ammonia terminal in Gopalpur, Odisha, which remains in the exploratory stage.

Competitive Moat in Cryogenic Infrastructure

A major highlight of the call was the discussion on the Mangalore terminal's competitive advantage. Unlike existing competitors who use pressurized spheres with low unloading rates (under 400 tons/hour), Aegis's new 82,000-ton cryogenic terminal will unload VLGCs at 2,000 tons/hour. This efficiency allows a VLGC to be evacuated in 24-36 hours compared to several days at pressurized terminals, potentially saving customers up to ₹100 crores in logistics inefficiencies and demurrage.

Accounting Nuances and Subsidiary Capital Raising

Management clarified a discrepancy where standalone profit appeared higher than consolidated profit. This was due to a ₹180 crore gain from selling CCPS in the AVTL subsidiary to Royal Vopak, which Indian accounting standards require to be recognized in standalone results but not in consolidated P&L. Furthermore, management addressed analyst concerns regarding potential capital raises at the subsidiary level (AVTL), stating that while they explore all funding possibilities, no final decisions have been made, and they will prioritize the best path for the company's growth.

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