Aegis Logistics’ Stock Hits A Record High On Bullish Analyst Ratings

Aegis Logistics Ltd.'s oil storage tanks (Source: Company website)

Aegis Logistics’ Stock Hits A Record High On Bullish Analyst Ratings

Shares of Aegis Logistics Ltd. jumped to a record high as brokerages cheered the company’s growth projects and new capex plans.

That’s despite a drop in the company’s total income and profit in the quarter ended March.

Q4 Highlights (QoQ)

  • Total income stood at Rs 1,026 crore, down 34.05%.

  • Net profit after tax fell 10.5% to Rs 69.98 crore.

  • Profit before tax down nearly 13% to Rs 92.44 crore.

  • Recommended a dividend of Rs 2 per share.

Shares of the company ended Wednesday's trade at Rs 375.50 apiece, up 5.52%. Of the eight analysts tracking the stock, six have a ‘buy’ rating, one suggests a ‘hold’ and one recommends a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies an upside of 6.8%.

Here's what brokerages make of Aegis Logistics:

Motilal Oswal

  • Maintains ‘buy’ rating with a target price of Rs 400 apiece, implying upside of 18%.

  • Aegis reported a miss on the brokerage’s estimates, primarily due to a drop in gas business, while the liquids business performed robustly.

  • Liquids business saw margin expansion in Q4 with the handling of higher margin products.

  • Mangalore, Haldia liquid terminals are expected to be commissioned in Q1; Kochi is expected to be commissioned in second half of FY22. These are likely to result in better margins as well as capacity has already been presold.

  • Despite domestic refinery expansion and new LPG terminals by rivals Adani and BPCL, Aegis would easily meet the brokerage’s forecast volume growth of 1.2 mmt by FY23, if not exceed it.

  • Even on a conservative basis, the brokerage expects a logistics volume CAGR of 20%, coupled with a logistics Ebitda CAGR of around 20%, over FY21-FY23.

  • Aegis indicated that it would announce its long-term growth strategy and new capex plans in June 2021.

Nomura

  • Maintains ‘buy’ and raises target price from Rs 285 to Rs 415, implying upside of 15.6%.

  • Aegis has a simple yet robust business model with strong growth prospects with Ebitda and cash flows directly correlated with volumes, further supported by a low-leverage balance sheet.

  • The company’s ability to generate cash is reflected in the low leverage levels despite a highly capex-intensive phase from FY16-21.

  • Major capital projects completion (Kandla, Pipavav, Haldia) in FY22 to drive volumes from FY23.

  • Announcement of the next leg of growth projects can provide further near-term rerating trigger for the stock.

  • Driven by increased adoption of clean fuel such as LPG, valuations can further be boosted.

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