Aegis Logistics - Q1FY14 Result Update - Sushil Finance

Aegis Logistics has come out with good set of numbers for Q1FY14. We attended the concall and some of the key takeaways are:-

- For Q1FY14, its consolidated revenues de-grew by 45.7% YoY to Rs.8064.6 Mn as guided by the management due to lower volumes in the B2B gas segment.

- Its Gas revenue for Q1FY14 is down by 46.9% YoY to Rs.7754.0 Mn however up by 8% on a QoQ basis due to lower volumes from the B2B segment. The company's wholesale business contributes more than 80% of its gas revenue, thus as the volumes from this segment have fallen drastically due to lower offtake from oil PSU's the revenue is impacted. Its volumes in the B2B gas segment are down by 34.9% YoY to 110,000 however they have improved sequentially with growth of 47% QoQ.

- However the higher margin distribution business (B2C) volumes have increased by 19% YoY to 13,800 tonnes. For Q1FY14 its gas PBIT stands at Rs.116.9 Mn vs loss of Rs.288.3 Mn in the previous quarter.

- Its Liquid Division has seen a good growth of 34.7%% YoY and 7% QoQ in Q1FY14 to Rs.310 Mn with Liquid PBIT at Rs.166.7 Mn up by 73% YoY and excellent PBIT margin of 53.7% up 12 pp. The Liquid division margins improved on debottlenecking at Mumbai plant and because it handled specialty chemicals at this plant having higher fees.

- Its EBITDA has come in green in Q1FY14 at Rs.244.5 Mn vs a loss of Rs.244.1 Mn in Q1FY13 and a sequential growth of 195% as the company has decisively closed all the outstanding options contract.

- It's RPAT for Q1FY14 stood at Rs.143 Mn up by 197% YoY with Net Profit Margin at 1.8%. EPS for Q1FY14 stood at Rs.4.3 vs FY13 EPS of Rs.10.1.

Expansion

Liquid Division - The Company has commissioned phase 1 of Haldia of 15,000 KL which is already running at 100% capacity utilization. The remaining 45,000 KL is likely to be commissioned by end of Q2FY13 at a total capex of Rs.480 Mn of which the company has already spent Rs.410 Mn till June'13. It has also commenced work at Pipavav for a 120,000 KL facility with a total capex of Rs.1010 Mn of which it has already incurred Rs.197Mn till June'13. This project is likely to get commissioned by FY15. Post this expansion the company's liquid division's capacity is likely to increase to 504,000 KL from the current 339,000 KL.

Gas Division - The Company is also increasing its gas division's capacity by 10% to 25,400 MT which translates into a handling capacity of 850,000 MT from current 750,000 MT at a capex of Rs.220 Mn. It is also widening its reach in the B2C segment with number of operational autogas stations at 94 from 80 in FY12. It also plans to add another 41 autogas stations by the end of FY15 and additional 35 Commercial & Industrial distributors vs current 45.

OUTLOOK & VALUATION

We strongly believe that Aegis Logistics, India's leading oil, gas, and chemical logistics company, is likely to be in a sweet spot from FY14E due to spurt in volume from the high margin business - Liquid division post expansion and Retail Autogas and Commercial cylinder business due to - cap on subsidized cylinders and network expansion. Also, with the expiry of the options contract in Mar'13, the volatility in earnings is also likely to reduce considerably which is visible in Q1FY14 numbers. However, revenue is likely to grow at a slower pace of 6% in FY14 as its wholesale low margin gas business is witnessing short term blip because of lower offtake from National Oil Companies. The stock currently trades at 4.7x and 3.1x its FY14E and FY15E EPS. We thus continue to maintain our positive outlook on the company with a BUY rating and a target price of Rs.205.

Source : Equity Bulls

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