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Aegis Logistics Ltd

| Q3 and 9 Months FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤5th Feb 26

Summary : Aegis Logistics reported record Q3 and 9-month FY'26 performance, driven by strong volume growth and margin expansion, while aggressively pursuing significant capacity expansion and strategic projects across its liquid, LPG, and ammonia businesses with a positive outlook.

Management Perspective positive : Management repeatedly used phrases like 'strong growth trajectory,' 'record performance,' 'robust increase,' 'firmly fixed on optimizing costs,' 'pleased to report,' 'very excited, very happy,' and 'very optimistic of the performance.'

Concall Report Analysis & Insights

Business Overview

  1. Achieved record revenue and EBITDA in Liquids and Gas divisions for 9 months FY '26.
  2. Reported 13% year-on-year revenue growth to INR5,739 crores for 9 months FY '26.
  3. Normalized EBITDA increased 26% to INR929 crores, with PAT up 39% to INR652 crores.
  4. Q3 FY '26 saw 29% EBITDA growth and 45% PAT growth, driven by operating leverage and product mix.
  5. Maintained a conservative debt gearing ratio of 0.6x and leverage capped at 3.5x EBITDA.

Future Growth Prospects

  1. Developing 64,000 kiloliters additional liquid capacity at Mumbai, commissioning Q1 FY '27.
  2. Expanding JNPT liquid capacity by 318,100 cubic meters and 77,286 metric tons LPG capacity.
  3. Jamnagar-Loni LPG Pipeline and Kandla-Gorakhpur LPG pipeline to drive significant volumes by June 2026.
  4. Planning a 94,148 cubic meter liquid terminal at Kandla, operational next year.
  5. Targeting $1.2 billion capex by FY '27 and $5 billion by 2030, expanding LPG, liquid, and ammonia capacity.

Management Insights

  1. Company maintains strong growth trajectory with expanding volumes and enhanced operating performance.
  2. Strategic infrastructure development is underway across multiple ports to meet future demand.
  3. Successfully utilized IPO proceeds to pay down outstanding debt, ensuring financial discipline.
  4. LPG business continues strong growth, driven by record logistics and distribution volumes.
  5. Liquid segment margins expanded due to favorable product mix and high-realization locations.

Signs of Skepticism

  1. Management's response regarding future debt for INR10,000 crores capex was described as 'tricky,' lacking clear specifics on financing structure.

Risk Factors

  1. Potential delays in KGPL pipeline commissioning due to land compensation issues.
  2. Uncertainty in total capacity and market share for liquid and ammonia by 2030.
  3. Future debt financing for large capex plans could be complex.

Good To Know

  1. Acquired 75% stake in Hindustan Aegis LPG Limited, transferring 25,000 metric tons LPG storage to AVTL.
  2. Signed a 15-year take-or-pay contract for petroleum products at Pipavav, ensuring strong volume visibility.
  3. Entered a nonbinding MOU for potential INR20,000 crores investment at Vadhavan port for new gas/liquid complex.
  4. India's deal with the U.S. for LPG import is commercial, allowing Aegis flexibility in sourcing.
  5. LPG is becoming a fuel of choice due to unique advantages like portability and price stability.

Key Drivers

  1. New capacities commissioning by FY '27.
  2. Pipelines becoming operational by June.
  3. Long-term take-or-pay contracts.
  4. Strong industrial demand for LPG.

Key Analyst Discussions

Competitive Environment

  1. Company holds approximately 30% of India's total liquid and LPG capacity.
  2. Aegis is setting up India's first third-party storage terminal for ammonia.

Market Trends & Consumer Behavior

  1. LPG imports are expected to grow 8% to 10% year-to-date.
  2. LPG maintains a cost advantage over natural gas, driving industrial demand.
  3. U.S. LPG cargo pricing is $10-$15 cheaper than Saudi CP, offering sourcing flexibility.

Financial Highlights

  1. Management guided to INR10,000 crores gross capex by FY '27, equivalent to $1.2 billion.
  2. Expected 25% EBITDA from new assets once they mature, typically within 6 months to 2 years.
  3. Liquid margins expanded due to product mix and higher realization locations, expected to be sustainable.
  4. Distribution EBITDA is projected between INR3,500 to INR4,000.

Product Composition

  1. Improved product mix, especially towards higher realization products, contributed to margin expansion.
  2. New capacities in high consumption zones and for complex products will boost average realization.

Strategic Considerations

  1. KGPL pipeline expected to be operational by June 2026, with most work completed.
  2. The 15-year take-or-pay contract at Pipavav will replace low-realization volumes, improving profitability.
  3. First phase of JNPT new liquid capacity (INR300-320 crores) to commission by Q1 FY '27.
  4. Company is penetrating new industrial clusters by shifting users from dirty fuels to LPG.