Elementary Evaluation of Aegis Logistics

Elementary Evaluation of Aegis Logistics: Indian logistics business is without doubt one of the most defragmented sectors with solely 10% organized. Nonetheless, inside the broader logistics sector lies a subset with entry obstacles, a extremely organized nature, requiring a number of security requirements and whatnot.

We’re speaking concerning the oil and fuel logistics business in India. Many a time, such area of interest areas are capable of present enticing alternatives for buyers.

On this article, we will carry out a elementary evaluation of Aegis Logistics, a famend identify in India’s power logistics business.

We will now begin our elementary evaluation of Aegis Logistics. masking firm overview, enterprise segments, business overview, financials, future plans, and key metrics. 

So with out additional ado, let’s start.

Firm Overview

Based in 1956, Aegis Logistics Ltd. is a number one built-in oil, fuel, and chemical logistics firm in India. It is without doubt one of the high importers and handlers of liquefied petroleum fuel (LPG) amongst non-public gamers within the nation. 

It owns and operates a big community of liquid and fuel terminals throughout outstanding Indian ports. The corporate has a capability of 15,70,000 kilolitres (KL) for chemical compounds and petroleum, oil & lubricants (POL). Moreover, Mumbai-headquartered Aegis has a static capability of 1,14,000 MT for LPG.

The corporate boasts of a powerful shopper base with names equivalent to Reliance Industries, Hindustan Petroleum, ONGC, Bharat Petroleum, Tata Metal, Shell, and extra. It employs about 1180 folks.

In its essence, the experience of the Aegis Group lies within the terminalling and dealing with of liquids and gases. The terminalling charges from the operations are the first and steady supply of earnings within the enterprise.

Enterprise Segments

Allow us to now transfer forward to know the enterprise segments of the corporate as a part of our elementary evaluation of Aegis Logistics.

Particularly, the logistics firm has two major reportable segments: Liquid Terminal Division and the Gasoline Terminal Division. 

In FY22, the liquid logistics section and fuel section accounted for 33% and 67% of the EBITDA respectively. 

It’s Liquid Terminal Division includes the storage and terminalling facility of oil and chemical merchandise masking third-party fuel logistics and operations & upkeep providers.

Gasoline Terminal Division undertakes imports, storage, and distribution of petroleum merchandise viz. LPG, Propane, and so forth. involving third-party fuel logistics, autogas retailing, packed LPG cylinders for the business section, industrial fuel distribution, fuel sourcing, and marine merchandise distribution.

Having learn concerning the firm and its working segments, allow us to commit the subsequent part of get an understanding of the business panorama.

Business Overview

India is a internet importer of just about of kinds of power. This truth, together with the rising inhabitants, rising earnings ranges, and financial improvement will improve the nation’s power demand within the coming years. All it will instantly result in the expansion of the power logistics sector within the nation.

India’s LPG demand grew at a CAGR of seven.1% from 7,016,000 metric tonnes (MT) in 2000-01 to 29,032,000 MT in 2021-22 (projected). 

Throughout the identical interval, a pointy dependency on imports emerged when imports surpassed home manufacturing of LPG in 2018-19. As an example, imports of 853,000 MT accounted for 12% of the nation’s complete LPG consumption in 2000-01. As early as 2020-21, imports fulfilled 57% of the nation’s LPG want.

Thus, we will observe that rising LPG demand and elevated dependency on imports bodes for the oil & fuel logistics sector.

The terminalling, retail, and distribution industries ask for specialised infrastructures like berths, fire-fighting tools, pipelines, transit storage, and dealing with amenities. This factors to the robust entry obstacles within the business.

Summing every thing up, we will observe that Aegis Logistics is well-placed to leverage the expansion alternatives that lie forward as India can be importing increasingly more clear power within the type of LPG sooner or later.

On this part we have a look at the important thing monetary metrics of the corporate: income & net-profit development, debt ranges, and return ratios.

Income and Web-profit Progress

We are able to see within the chart above that the revenues of Aegis Logistics have been inconsistent over time. Nonetheless, throughout the identical interval its internet revenue climbed 80% from Rs. 214 crores in FY18 to Rs. 385 crores in FY22. 

The rise in earnings might be attributed to enhancing working margins for the corporate. The desk under presents working revenue margins and internet revenue margins for the final 5 years.

Return Ratios and Debt Figures

Regardless of being in a capital-intensive business, Aegis Logistics has a low debt-to-equity ratio of 0.18. It boasts a high-interest protection ratio additionally at 26.35 instances. 

As for the important thing return ratios: return on capital employed (RoCE) and return on fairness (RoE), they’ve improved over time. The desk under highlights the strengthening of Aegis’ earnings within the current monetary 12 months.

Thus far we’ve checked out solely previous years’ monetary statements as a part of our research of the elemental evaluation of Aegis Logistics. On this part, we have a look at what lies forward for the corporate and its buyers.

Aegis has shaped a JV with Royal Vopak N.V., a Dutch impartial tank storage firm to determine liquids and fuel terminalling amenities at Pipavav, Haldia, Mangalore, and Kochi. Moreover, it secured sourcing tenders for the 2022 calendar 12 months for about 800,000 metric tons.It has additionally signed a ten+15 years contract with Shell, a UK oil big for the utilization of 21,000 kiloliters of petroleum storage. This gives the corporate with strong income visibility.Aegis has deliberate 65 extra fuel retailing stations in 20 states in close to future from 135 stations in 10 states presently.In FY22-23 the corporate shall see larger volumes of LPG dealt with due to the commissioning of assorted new initiatives at its terminals: Kandla, Haldia, Mumbai, and Pipavav.Moreover, the enlargement of its liquids terminal at Mangalore and Kochi will fetch higher volumes in FY23 for the corporate.

Elementary Evaluation of Aegis Logistics – Key Metrics

We at the moment are virtually on the finish of our elementary evaluation of Aegis Logistics. Allow us to take a fast have a look at the important thing metrics of the corporate.

In Conclusion

On this article, we carried out a elementary evaluation of Aegis Logistics. From what we’ve studied thus far, we will see that the corporate is trailing behind by way of revenues although it has improved on the profitability entrance.

Going ahead, buyers should monitor the enterprise carefully to ensure it continues enchancment in its on revenue margins entrance. Equally, a development in revenues shall even be on buyers’ minds. 

Do you assume Aegis Logistics will have the ability to match its previous income ranges together with improved margins? In your opinion, what shall be the opposite key metrics buyers ought to monitor concerning the enterprise? How about you tell us within the feedback under?

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Vikalp Mishra is a commerce graduate from the College of Delhi. He likes to put in writing on finance, cash and enterprise. He’s a voracious reader with a real curiosity in investing. Drop him a mail at [email protected].