Fundamental Analysis of Aegis Logistics: Indian logistics industry is one of the most defragmented sectors with only 10% organized. However, within the broader logistics sector lies a subset with entry barriers, a highly organized nature, requiring multiple safety standards and whatnot.
We are talking about the oil and gas logistics industry in India. Many a time, such niche areas are able to provide attractive opportunities for investors.
In this article, we shall perform a fundamental analysis of Aegis Logistics, a renowned name in India’s energy logistics industry.
Fundamental Analysis of Aegis Logistics
We shall now start our fundamental analysis of Aegis Logistics. covering company overview, business segments, industry overview, financials, future plans, and key metrics.
So without further ado, let’s begin.
Company Overview
Founded in 1956, Aegis Logistics Ltd. is a leading integrated oil, gas, and chemical logistics company in India. It is one of the top importers and handlers of liquefied petroleum gas (LPG) among private players in the nation.
It owns and operates a large network of liquid and gas terminals across prominent Indian ports. The company has a capacity of 15,70,000 kilolitres (KL) for chemicals and petroleum, oil & lubricants (POL). Additionally, Mumbai-headquartered Aegis has a static capacity of 1,14,000 MT for LPG.
The company boasts of a strong client base with names such as Reliance Industries, Hindustan Petroleum, ONGC, Bharat Petroleum, Tata Steel, Shell, and more. It employs about 1180 people.
In its essence, the expertise of the Aegis Group lies in the terminalling and handling of liquids and gases. The terminalling fees from the operations are the primary and stable source of income in the business.
Business Segments
Let us now move ahead to understand the business segments of the company as part of our fundamental analysis of Aegis Logistics.
Specifically, the logistics company has two primary reportable segments: Liquid Terminal Division and the Gas Terminal Division.
In FY22, the liquid logistics segment and gas segment accounted for 33% and 67% of the EBITDA respectively.
It’s Liquid Terminal Division involves the storage and terminalling facility of oil and chemical products covering third-party gas logistics and operations & maintenance services.
Gas Terminal Division undertakes imports, storage, and distribution of petroleum products viz. LPG, Propane, etc. involving third-party gas logistics, autogas retailing, packed LPG cylinders for the commercial segment, industrial gas distribution, gas sourcing, and marine products distribution.
Having read about the company and its operating segments, let us devote the next section of get an understanding of the industry landscape.
Industry Overview
India is a net importer of almost of types of energy. This fact, along with the growing population, rising income levels, and economic development will increase the nation’s energy demand in the coming years. All this will directly lead to the growth of the energy logistics sector in the country.
India’s LPG demand grew at a CAGR of 7.1% from 7,016,000 metric tonnes (MT) in 2000-01 to 29,032,000 MT in 2021-22 (projected).
During the same period, a sharp dependency on imports emerged when imports surpassed domestic production of LPG in 2018-19. For instance, imports of 853,000 MT accounted for 12% of the nation’s total LPG consumption in 2000-01. As early as 2020-21, imports fulfilled 57% of the nation’s LPG need.
Thus, we can observe that rising LPG demand and increased dependency on imports bodes for the oil & gas logistics sector.
The terminalling, retail, and distribution industries ask for specialized infrastructures like berths, fire-fighting equipment, pipelines, transit storage, and handling facilities. This points to the strong entry barriers in the industry.
Summing everything up, we can note that Aegis Logistics is well-placed to leverage the growth opportunities that lie ahead as India will be importing more and more clean energy in the form of LPG in the future.
Aegis Logistics – Financials
In this section we look at the key financial metrics of the company: revenue & net-profit growth, debt levels, and return ratios.
Revenue and Net-profit Growth
We can see in the chart above that the revenues of Aegis Logistics have been inconsistent over the years. However, during the same period its net profit climbed 80% from Rs. 214 crores in FY18 to Rs. 385 crores in FY22.
The rise in earnings can be attributed to improving operating margins for the company. The table below presents operating profit margins and net profit margins for the last five years.
| Year | NPM (%) | OPM (%) |
| 2022 | 8.31 | 10.66 |
| 2021 | 6.48 | 9.18 |
| 2020 | 1.86 | 3.35 |
| 2019 | 4.48 | 5.84 |
| 2018 | 4.46 | 5.01 |
Return Ratios and Debt Figures
Despite being in a capital-intensive industry, Aegis Logistics has a low debt-to-equity ratio of 0.18. It boasts a high-interest coverage ratio also at 26.35 times.
As for the key return ratios: return on capital employed (RoCE) and return on equity (RoE), they have improved over the years. The table below highlights the strengthening of Aegis’ earnings in the recent financial year.
| Year | RoCE (%) | RoE (%) |
| 2022 | 17.22 | 16.40 |
| 2021 | 13.69 | 11.53 |
| 2020 | 11.16 | 6.01 |
| 2019 | 20.03 | 15.91 |
| 2018 | 16.72 | 16.38 |
Aegis Logistics – Future Plans
So far we have looked at only past years’ financial statements as part of our study of the fundamental analysis of Aegis Logistics. In this section, we look at what lies ahead for the company and its investors.
- Aegis has formed a JV with Royal Vopak N.V., a Dutch independent tank storage company to establish liquids and gas terminalling facilities at Pipavav, Haldia, Mangalore, and Kochi.
- Additionally, it secured sourcing tenders for the 2022 calendar year for approximately 800,000 metric tons.
- It has also signed a 10+15 years contract with Shell, a UK oil giant for the usage of 21,000 kiloliters of petroleum storage. This provides the company with robust revenue visibility.
- Aegis has planned 65 more gas retailing stations in 20 states in near future from 135 stations in 10 states presently.
- In FY22-23 the company shall see higher volumes of LPG handled because of the commissioning of various new projects at its terminals: Kandla, Haldia, Mumbai, and Pipavav.
- Furthermore, the expansion of its liquids terminal at Mangalore and Kochi will fetch better volumes in FY23 for the company.
Fundamental Analysis of Aegis Logistics – Key Metrics
We are now almost at the end of our fundamental analysis of Aegis Logistics. Let us take a quick look at the key metrics of the company.
| CMP | ₹302 | Market Cap (Cr.) | ₹10,500 |
| EPS | ₹11.2 | Stock P/E | 26.8 |
| ROCE | 17.2% | ROE | 16.4% |
| Face Value | ₹1.0 | Book Value | ₹62.1 |
| Promoter Holding | 58.1% | Price to Book Value | 4.86 |
| Debt to Equity | 0.18 | Dividend Yield | 0.83% |
| Net Profit Margin | 8.31% | Operating Profit Margin | 10.66% |
In Conclusion
In this article, we performed a fundamental analysis of Aegis Logistics. From what we have studied so far, we can see that the company is trailing behind in terms of revenues though it has improved on the profitability front.
Going forward, investors will have to track the business closely to make sure it continues improvement in its on profit margins front. Similarly, a growth in revenues shall also be on investors’ minds.
Do you think Aegis Logistics will be able to match its past revenue levels along with improved margins? In your opinion, what shall be the other key metrics investors should track about the business? How about you let us know in the comments below?
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