Aegis Logistics – Can It Be Exception?

My notes from Q1FY23 conference call

Launch of JV with Vopak commenced operation on 25-May

Kandla port operation has commenced

Interim Dividend – Rs. 1.5

LPG Volumes handled ~ 6.37 L MT at Mumbai, Pipavav and Haldia compared to ~5.67 L MT Q1’22. Despite 10% lower volume at Haldia due to Upgradations

Bulk distribution reported 176% growth supported by Kandla volumes. Expect increased volume to sustain in coming quarters.

AutoGAS sale improved 45% in volume vs Q1’22

Spike in other expenses about ~ 3x, JV related expenses are ~62 Cr which caused the steep increase.

Pipavav would LPG jetty compatible in Q3.

Outlook for FY23 – Liquid business and Gas business expect to be doing well

Kandala is operationally stabilized

~1500 Cr. of cash(after taxes on 2050 Cr) on balance sheet, Consolidated debt is ~ 900 Cr. This is as a result of ~2,050 Cr is received from the Vopak deal

Kandla –

Guidance for full year from Kandla port is – 0.7 mn via distribution or through putting. Confident of 70 cr Ebita from Kandla in FY23.No current agreement with any oil company from Kandla port for through putting, yet.

Kandla Gorakhpur pipeline update – is being constructed would have connection to Pipavav. The allocation of 1.5 Mn. ton volume for Pipavav port. There would be similar allocation to Kandla port. The pipeline is being constructed by a third party. The LPG will be throughput to this pipeline from Pipavav and Kandla.

Management expect to grow business and earnings by 25-40% per annum over next few years. (when asked about – For 3-5 yrs perspective, Gas volume projections at LPG terminals from current 3 Mn.)

CRL terminals and Friends group terminals have put company in commanding position at Kandla port. Brings 700,000KL capacity in liquid business. Objective is to bring the margins up for these over the next period. Scope for operational efficiencies improvement in future.

Sourcing Business- On volumes still not at Pre-covid level, New tenders are coming out and volumes are expected to be back on track this year. Sourcing is not a big profit contributor.

On why AutoLPG has not grown rapidly, Presence of subsidized CNG, Company expects subsidy for CNG is not sustainable. The LPG distribution provides good margins. Difficult to do business at local level. Multi-Fuel distribution model is being built up. And dealers are able to make money. Company trying to push multi-fuel distribution rather than only Auto-LNG.