Aegis Logistics – Can It Be Exception?

Confcall notes: Confcall Link & FY24 – Q4 PPT Presentation

Aegis business getting supercharged now, with capex and growth lining up nicely.

Main Announcement from Raj Chandaria

Dividend Announcement:

• Final dividend recommended: INR 2 per share.
• Total dividend for the year: INR 6.50 per share.
• Two interim dividends already paid in February and August.

Company Mission and Strategy:

• Focus on transitioning to a more sustainable India.
• Mission to store and distribute bulk liquids and gases in a safe and sustainable manner.
• Looking for M&A opportunities to expand.
• Expanding distribution footprint by installing more LPG filling plants.
• Building out capex plan for growth.

Financial Performance:

• Surpassed INR 1,000 crores in normalized EBITDA for FY ’24.
• Record revenues and EBITDA in Liquid Division.
• Highest-ever volumes in Logistics and Distribution segment.
• Operating EBITDA for Liquid division: INR 396 crores, for LPG division: INR 612 crores.
• Record volumes in LPG logistics business and distribution volumes.
• Profits for FY ’24: INR 672 crores, 32% year-over-year growth.

Expansion Projects:

• Various expansions and acquisitions across different ports like JNPT, Pipavav, Mangalore, Kandla, Kochi, and Haldia.
• Total liquid capacity to reach almost 2 million KL.
• Additional 300,000 KL to be constructed in FY ’25.
• Plans for ammonia terminals to be constructed in Gujarat.
• Major capex plan of INR 4,500 crores by FY ’27.

Q&A Insights:

• Discussion on ammonia terminal capacity and financials.
• Margins improvement in Distribution business due to procurement efficiencies.
• Expectation of logistics volumes to exceed 5 million tons in FY ’25.
• Liquid revenue growth attributed to capacity addition and product mix.
• Liquid capacity utilization at 87%.
• Expectation of 10-15% growth from capacity addition in Liquid business.
• Confidence in delivering 25% EPS growth year-on-year.
• Logistics division EBITDA per ton around INR 1,100.
• Distribution EBITDA impacted by procurement efficiencies.

Overall Outlook:

• Management optimistic about continued earnings growth.
• Focus on leveraging different business segments for profit growth.
• Emphasis on sustainable and strategic expansion for the future.

Ammonia Terminal:

• Revenue between ₹2,500 to ₹3,500 per stacking capacity metric ton.
• Potential profitability similar to LPG, around 90% EBITDA.
• Expected EBITDA of ₹120 crores at full or 3x asset turn.
• Terminal equipped to handle import and exports of various types of ammonia.
• Initial focus on gray ammonia imports and green ammonia exports.
• Expected demand for green ammonia in the future.
• Infrastructure already in place at Pipavav for the terminal.
• Initial capex estimated at around ₹500 crores.

LPG Business:

• Throughput EBITDA per ton in FY ’24 was ₹1,100.
• Distribution EBITDA per ton in FY ’24 increased to ₹4,500 to ₹5,000.
• Minority contribution to profit expected to be between 15% to 20%.
• Healthy competition with natural gas in markets like Morbi.
• Propane continues to be in demand due to cost advantages over natural gas.
• Focus on replacing dirty fuels with clean fuels like LPG.

Liquid Business:

• Return on capital employed for the Liquid division varies due to factors like CWIP, assets under construction, and cash reserves.
• IRR for Liquid division expected around 25%.
• Capacity utilization expected to be high as demand drives usage from day one.

Distribution Business:

• Procurement efficiencies led to improved EBITDA in a particular quarter.
• Average EBITDA margin in the Distribution business expected to be around ₹3,000 per ton.

Future Outlook:

• Anticipated growth in LPG demand in India due to energy transition.
• Government initiatives supporting the growth of clean fuels like LPG.
• Potential for significant growth in LPG demand in the coming years.
• Confidence in delivering good financial results in FY ’25 and beyond.

Challenges and Opportunities:

• Potential challenges from natural gas distribution plans by the government.
• Strong push by the government for LPG usage and distribution.
• Focus on continuous growth and expansion in the sector.

New Projects and Developments:

• Announcement of a new ammonia terminal project.
• Expansion of storage facilities and tanks to enhance capabilities.
• Positioning the company well for future growth and sustainability.
• Confidence in executing expansion plans and delivering strong financial performance.