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Earnings Call Analysis
Q2-2025 Analysis
Aegis Logistics Ltd
Aegis Logistics Limited has reported impressive results for the first half of the fiscal year 2025 (FY '25). The company achieved a consolidated normalized EBITDA of INR 487 crores, marking a record for the first half of any fiscal year. This represents a 10% year-over-year increase, with net profits exceeding INR 300 crores, specifically at INR 310 crores, reflecting the robust growth across its operational divisions.
The performance of both the Liquids and LPG divisions has significantly contributed to Aegis' overall success. The Liquids division reported an operating EBITDA of INR 201 crores, a notable increase of 27% compared to last year, fueled by enhancements in capacity and volume. Meanwhile, the LPG division delivered an EBITDA of INR 286 crores, maintaining last year's solid performance. Cumulatively, the transportation volumes across all terminals showed a healthy growth of 9%, reaching 2.08 million metric tons during the first half of FY '25.
Aegis Logistics is actively pursuing capacity expansions which are pivotal to its growth strategy. The company has plans to add 130,000 metric tons to its LPG storage capacity at new facilities in Mangalore and Pipavav by the end of FY '25. Additionally, a new ammonia terminal with a capacity of 25,000 metric tons is set to commence construction in Pipavav, further diversifying Aegis' operations. The management indicated that they are looking to build more ammonia terminals as demand grows in India's transitioning energy market.
Looking ahead, Aegis has set a targeted average compound annual growth rate (CAGR) of 25% from FY '22 to FY '27, supported by its robust capital expenditure program totaling INR 4,500 crores, of which about half is already complete or in progress. The current capital projects are expected to generate revenue commencing in Q1 of FY '26, driving further growth.
The financial health of Aegis remains strong, characterized by low debt levels and solid cash flows. This stability not only supports ongoing projects but also prepares the company for future opportunities as they arise. Aegis aims to leverage this position to further explore and invest in significant infrastructure projects, thereby enhancing its market footprint.
In a significant strategic move, Aegis Logistics has filed a Draft Red Herring Prospectus (DRHP) for an IPO of its subsidiary, Aegis Vopak Terminals Limited. The funds raised from the IPO will primarily be used to reduce outstanding debts, effectively lowering interest costs and enhancing overall profitability for Aegis. Management reassured that despite possible increases in minority interests post-IPO, the overall impact on the parent company’s financials would be positive.
Given the solid financial performance, strategic growth initiatives, and planned capacity expansions, Aegis Logistics stands poised for continued success. Investors can look forward to a potentially very favorable environment characterized by increased revenue streams and strong market positioning in India's evolving energy landscape.
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Ladies and gentlemen, good day, and welcome to the Aegis Logistics Limited Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
Before we begin the call, I would like to give a short disclaimer. This call may contain some forward-looking statements, which are completely based upon our beliefs, expectations as of today. The statements are not the guarantee of future performance and involve unforeseen risks and uncertainties.
With this, I would now like to hand the conference over to Mr. Raj Chandaria for his opening remarks. Over to you, sir.
Thank you very much, and welcome to this slightly delayed Q2 conference call. We obviously had the Diwali break.
This evening, I'm joined by our CFO, Mr. Murad Moledina; and Ms. Payal Dave from our Investor Relations team, and we will be presenting the performance for the first half of -- ended on September '24.
I'm pleased to announce that we have achieved a record consolidated normalized EBITDA of INR 487 crores in the first half of '25 -- FY '25, making our highest ever half-yearly performance to date. Both divisions contributed to this performance. Liquids reported an operating EBITDA of INR 201 crores, while the LPG division delivered INR 286 crores. And our profits for the first half exceeded INR 300 crores, and the earnings per share stood at INR 7.33.
Now the primary drivers behind this performance have been the sustained growth in volumes at our Kandla terminal, along with the expansion in the Liquids business through the addition of new capacity and higher utilization of recently commissioned tanks. And we did also achieve the highest ever logistics volume for gas in the first half.
As I have noted previously, Aegis' purpose is to support India's transition towards a more sustainable future. And consistent with that vision, we had announced the capacity expansion at our first ammonia terminal of 25,000 metric tons capacity, which will be located at Pipavav, Gujarat. And we expect to commence construction soon. But of course, after receiving all the necessary permits from the regulatory authority.
And I'm really pleased to announce that we have already received a commitment from an anchor customer. So that bodes well for the future of this business. And we expect to build more ammonia terminals as this business matures and our endeavor in this business will be to become vertically integrated, just like we are in the LPG business.
India is an important ammonia market, and we expect to leverage our skill set in building and operating cryogenic gas terminals.
In the LPG division, our ongoing capacity expansion at Mangalore -- new Mangalore in Karnataka and Pipavav in Gujarat is expected to increase our LPG storage capacity by 130,000 metric tons by the end of fiscal '25.
In the Liquids division, our ongoing greenfield expansion at JNPT in Navi Mumbai is aims to increase our storage capacity by about 101,900 cubic meters, almost complete. And I think by the time we have our next call, we should be able to announce this [indiscernible] We're also excited to announce that we have been allocated land by the port in Mumbai for further expansion, and we plan to build a storage terminal with capacity of approximately 150,000 cubic meters on this site with an estimated project cost of around INR 250 crores.
The performance in the first half H1 and the commissioning of these new projects in both the greenfield and brownfield currently underway really strengthens our confidence in meeting our guidance that we have given in achieving a 25% CAGR over the next 3 years.
In the last call, we had given you an update on the capital expenditure program of Aegis. Let me repeat that. Out of the total CapEx program of INR 4,500 crores by FY '27, approximately already 50% is complete and/or currently in progress. And we anticipate that the Pipavav and Mangalore projects will be commissioned soon, with the revenue expected to start in Q1 of FY '26. The pace of capital spending is expected to persist beyond FY '27 as we explore further opportunities, which are in our pipeline.
Before I hand over the call to our CFO to brief you on the financial performance of the company in more detail, let me update you on the developments at Aegis Vopak Terminals Limited, our subsidiary. Yesterday, I'm pleased to announce that this company filed a DRHP for an IPO, and the document has been uploaded on the SEBI website and it's also available on the website of Aegis Vopak Terminals Limited. And the capital raise in AVTL will help the company reduce a certain portion of the outstanding debts and also some portion will help fund other general corporate purposes.
So to summarize, the coming year should see higher revenues and profitability, led by the additional capacities, which are already under construction and set to come online in phases by the end of FY '25, '26. The continuing ramp-up of the Kandla LPG terminal, along with the improved utilization at our existing terminals and leveraging the terminals and supporting infrastructure to increase our distribution business.
So with that, I'd like to hand over the line to Mr. Murad Moledina, our CFO, to present the financial performance in more detail. Murad, over to you.
Yes. Thank you, sir. Good evening. Both of our divisions have performed very well for the half year ending September 2024. We achieved another record-breaking quarter with the highest EBITDA ever recorded in H1 of FY '25. Our H1 FY '25 profitability also crossed INR 300 crores, that is INR 310 crores. So for the group, EBITDA for H1 FY '25 stood at INR 487 crores, an increase of 10% year-on-year. Profit after tax increased also by 10% to INR 310 crores for the half year FY '25 versus INR 283 crores in H1 FY '24. Earnings per share, INR 7.33 in H1 FY '25 as compared to INR 6.92 for H1 FY '24.
I would now like to provide you with some more details on the individual segments. Beginning with Liquids business. H1 FY '25 revenue from Liquids segment stood at INR 273 crores as compared to INR 232 crores in H1 FY '24, an increase of 18% Y-o-Y. We delivered the highest ever H1 EBITDA of INR 201 crores versus INR 158 crores in the previous year same period, which is an increase of 27%. This improved performance can be attributed to the new capacities coming online as well as acquisitions at Kandla, Kochi and Bangalore.
LPG business. In H1 FY '25, the EBITDA from LPG was INR 286 crores. We again delivered the highest ever H1 EBITDA for gas, which was also slightly above H1 FY '24.
Now let me give you volume details of each subsegment. Logistics volume. Throughput volumes in H1 FY '25, the LPG volume handled at all our four terminals, Mumbai, Haldia, Kandla and Pipavav was 2.08 million metric tons versus 1.90 million metric tons in H1 FY '24, that is an increase of 9%.
The distribution volumes of auto, commercial and industrial bulk segment handled 2.58 lakh metric tons in H1 FY '25 against 2.9 lakh million -- 2.9 lakh metric tons in H1 FY '24. However, the volumes for Q2 FY '25 were in line with Q1 FY '25 volumes.
Sourcing volumes. The sales volume of sourcing business Q1 FY '25 was 318,000 metric tons versus 400,000 metric tons in the same quarter last year.
The financial position of the company remains robust with low debt, strong cash flows and a solid balance sheet.
With this, I now hand over this line to the moderator to start the question-and-answer session. Thank you.
[Operator Instructions] The first comes from Vikram Suryavanshi from PhillipCapital.
Just to confirm that Mumbai liquid storage capacity that we are doing for INR 250 crores, will it be part of the JV or stand-alone?
It will be standalone.
Yes.
[indiscernible] JNPT also?
No, JNPT will be in the JV.
Okay, in JV. Okay. And what is the CapEx, I think I just want to reconfirm this liquid capacity expansion of Kandla 25,000, then Mangalore 71, and Kochi?
Mangalore is ready, and it should be commissioned any moment. Kandla is in progress. And Kochi is already completed.
And Kandla, when it is expected?
Sorry?
Kandla, when it is expected?
Kandla should also happen by this FY '25.
Understood. Okay. You give update about gas side on Mangalore and Pipavav already by FY '25?
Correct. Yes.
Okay. And in case of ammonia, how is the asset turn compared to gas business? And does it require the special approval process just to get more idea on the business?
No, the permits are similar. Of course, the infrastructure does have additional equipment to cater to the specific requirements of ammonia. The turnaround is not as much as LPG, but the rates are higher for the throughput. So it is more like liquid business where it is more based on static capacity and the rates generally are 2.5x to 3x the rate of LPG throughput.
Understood. And last question from my side is about we have opportunity of retailing in LPG, but are there a similar opportunity for ammonia or it will be more like institutional sales?
We are exploring. So it's too early to say anything on that, but we are exploring. You cannot say retailing, but industrial distribution kind of volumes may be possible.
[Operator Instructions] The next question comes from Kumar Saurabh from Scientific Investing.
Sir, my question is regarding the DRHP, which has been filed. If you can highlight how is going to be the structure and won't the current company will become more of a holdco because bulk of the business will go to this JV, which will get listed. So from current shareholders of Aegis Logistics perspective, how do you see the transaction, if you can elaborate on it?
We have just filed the DRHP today, and we'll discuss more in the coming quarter as far as DRHP is concerned. We have already said earlier that the equity infusion into the JV will be value accreting to the holdco because we are eliminating interest cost, which is a very high cost for infrastructure companies. So even though minority interest might increase, it will be compensated by the decrease in interest cost as these funds will be used to pay the debts. So the holdco in that case will remain unaffected debt for because the debts are going -- will go off the books.
Okay. Okay. And sir, one bookkeeping question. How the profit from this JV currently flows into Aegis Logistics? That is question one.
And second, I request once we have spent, let's say, 1 week, all of us can go through DRHP, we can have a call just to discuss that and the nuances of that like you discussed when we had the Vopak JV, that would be great.
So the JV consolidation happens line by line on account of it being a subsidiary. Even after the IPO, as and when it happens, it will -- we will have management control, and it will still get consolidated line by line. So there will be no change whatsoever.
Secondly, DRHP, we are very near -- because this time we did earnings call a little late on account of Diwali and certain -- we were also a little occupied. So we will have our next call very soon, and I think that will be end of January. So we'll discuss more at that time. Yes.
Sure, sir. Sir, last question. I think you have also recently filed for expansion in the hydrogen capacity. Any details about that? How much capacity when it will go live, all of that?
No, we have not filed anything on hydrogen as yet. So I...
[Operator Instructions] The next question comes from Rajit Aggarwal from Atharva Investment Managers.
It's a pleasure to interact with you. I just had some quick questions regarding the capacity -- liquid capacity. If you can just help me with the location-wise capacity and what is the expansion? I somehow keep missing the total capacity and the expansion being planned. I can quickly say out the capacities loud and if you can confirm if it's a correct one.
I think it is better that you look at the specific slide, which is in our investor presentation, which gives port-wise capacities in the pie chart. So there cannot be anything different than that. It will be much easier if you look at our H1 FY '25 investor presentation.
Is that the one -- I mean, the one which has been uploaded, I'm sorry, I'm missing that pie chart in that presentation.
Or you can -- what you can do is this time, there were some restrain on us on account of this DRHP filing. You can look at Q1 FY '25, where you will definitely find it. And it is very clearly the splits have been given in case of gas as well as liquid, port-wise capacities.
All right, sir, I have that presentation also in front of me.
Slide 49.
Slide 49, okay.
48. 48, sorry.
It's the same, right? Whatever there is, it's the same?
Yes, yes, it will not change.
And the expansions?
Expansion is also given in the slide. If you look at the investor presentation, the expansions have also been mentioned. See, the expansion is in JNPT, which is 100,000 approximately. There is 71,000 odd in Bangalore, 25,000-odd in Kandla. And Mumbai, we have just said 150,000 is yet to begin. So these are the current expansions which are happening in the...
And ammonia one you mentioned, 25,000 as well, right?
Yes. In Pipavav.
[Operator Instructions] The next question comes from Rajesh Agarwal from Moneyore.
Sir, recently, the allocation of natural gas APM mechanism has been reduced to Government of India. So if the CNG prices goes up, will it benefit our distribution volumes?
There is always competition between fuels. So a problem for one fuel is always an advantage to the other fuel. But in spite of that, LPG has always been cheaper than natural gas, but it will make it more attractive. Time will tell how this affects our volume and contribution.
Sir, currently, how much it is lower by from CNG, LPG.
It keeps changing, but it is generally between 10% to 20% difference will always be there.
Always be there. Okay.
[indiscernible] being lower.
Understood.
See calorific value, which it has more than natural gas by 25%.
[Operator Instructions] Our next question comes from Amit Vora from [ The Homeopathic Clinic ].
I'm an individual investor. And my question is, sir, regarding, are we confident that this year also, this current FY '25, we will achieve 25% growth as compared to FY '24?
We'll try our best. So what we have always given a guidance is that in the 5-year period, average CAGR growth will be 25%. So it is not necessary that it will be exactly 25% every year. But we are very confident that in the 5 years period from FY '22 to FY '27, because of the infrastructure that we are undertaking, we would be in a position to achieve an average CAGR growth of 25%...
Got it. That was very great about you. Sir, one more question. Sir, about AVTL, as an individual investor, we have a lot of -- we don't have the technical knowledge like an analyst or something. If you can, as an individual investor, make us understand something about AVTL. We have some.
Look at the website, which has gone live, and you will be able to get the details.
[Operator Instructions] Our next question comes from Ronak Agarwal from [indiscernible] The line of the participant has been dropped. [Operator Instructions] Next follow-up question comes from Vikram Suryavanshi from PhillipCapital.
So basically, this Mumbai capacity, which is coming, will it be part of Sea Lord Containers facility, which already we have as a subsidiary?
Aegis Logistics Limited.
Aegis Logistics Limited. And that INR 250 crores will be expansion, including land and everything? Or will it be -- land will be leased from the ports?
Land is leased from the port.
Okay. So basically, INR 250 crores will be more on the asset side only and okay and land will be leased. Yes.
Vikram, sir, you have any further follow-up questions?
No. Thank you.
[Operator Instructions] The next question comes from Kumar Saurabh from Scientific Investing.
Yes, Sir, my question was on ammonia. I'm sorry, it is not hydrogen. For ammonia, you've done a filing, and it says it will go live by FY '26. So what is the asset turn? And what is the kind of margin expected out of that business?
No, it is very -- we have just stepped into ammonia business, including the terminal. So I always -- like I have already said that it is more like liquid business, which works on the static capacity and the revenue rates are generally 2.5x to 3x the revenue rate of LPG. EBITDA margins are similar around 90%, and that is the way it is.
Okay. Okay. And sir, what is the opportunity size in this business? Like I'm not asking for 1 or 2 years, but in terms of long run, based on your study, what is the opportunity size for you?
45% of India's energy needs are by unprocessed biomass. So there is something called energy transition that is happening. It depends on the pace at which there is a transition from dirty fuel to clean fuel. Ammonia is a clean fuel. It is non-fossil. It is also a carrier of hydrogen. So it has got lots and lots of pluses, which makes us believe that there will be a growth in this sector. But we are not in a hurry. We will -- as the market will mature, we will undertake development of these ammonia terminals at various ports.
The next question comes from Kunal Bhatia from Dalal & Broacha Stock Broking Limited.
Sir, I just wanted to know what's your outlook on the sourcing volume because this time, it was slightly below the expectation. So what's your outlook on the sourcing volume? And I'll ask a follow-up later.
Yes. Sourcing volumes do not move my EBITDA needle. The margins are very, very slim as far as sourcing business is concerned. We do sourcing business to provide value addition to our customers if and as and when they need. So the business does not depend -- the profits do not depend on sourcing business. So we only do that if -- and it is always back to back.
So when we are able to get value for our customers, we source LPG for them. You know these are very big customers like the national oil companies and other big companies. So wherever and whenever we are able to provide them value, we do that. But it has not a great significant contributor to our EBITDA.
Okay. And sir, my second question was in regards to this IPO, which we have planned. So post this IPO, could you -- give us some sense on how much would be our stake in the new entity, which is listed? And how will it affect the current shareholders of Aegis Logistics? So we do become...
Like we said, we have just filed it today. So you can look at the DRHP. And next time when we meet on an earnings call, you would have absorbed a lot of data, and we would be in a position to talk on more -- in more detail. So our upcoming earnings call will be sometime in January. I think that's a better time to talk about this. We have just about filed it a few hours ago. So...
Yes. Sir, I understand the filing has happened today, but obviously, the planning of this would have happened since a long period of time because as a current -- if current shareholder...
We are not at liberty to talk as of now. So you will just give us some time. Next time, like I said, we'll be able to talk. But I've already explained that this IPO proceeds will be used to pay the debt and therefore, interest will go down, which will compensate the minority interest increase that is going to happen. And the dilution, both the partners would be doing equally. So all of it will not come to any one partner, the dilution. And we would obviously be doing in two phases equity issue. So all of it is not going to happen in the first phase itself. I think I will limit myself to this now. Then we'll discuss more in the coming earnings call.
Mr. Bhatia, you have any further questions?
No, that's it.
The next question comes from Vineet Jain from [indiscernible] Capital.
My first question is on -- is there any further update on the Kandla-Gorakhpur Pipeline?
It is progressing well. And I think sometime mid of next year, it should be commissioned.
By then can we expect by Q3, can we expect some business to flow through that?
We hope so. Let's see.
And one clarification, the ammonia side is in the JV or the stand-alone, sir?
Ammonia will be in the JV.
Sir, and post the IPO of Aegis Vopak, the stand-alone will be left with a lot of cash. So what do you plan? And have you already planned anything? Or can you give some idea over here?
Yes, we are always holding a lot of cash for a lot of opportunities that we believe are there. And as and when these opportunities crystallize and we are ready to undertake, we will do the disclosures and talk about it. But there are always opportunities that we look at. But only when they mature and we are ready to undertake, do we then disclose and discuss with our investors. As of now, whatever we have disclosed, the CapEx coming up are the ones that we are doing.
Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments.
Okay. Yes, thank you for all those interesting questions. I hope we have been able to answer them. And of course, we will have another opportunity in a short period of time once in January. We're quite optimistic about the direction of the company's future. We continue to see gains in revenue profitability through improved utilization and a favorable product mix. And we will keep you updated every quarter. So thank you very much for joining our call, and we will speak next time. Thank you.
Thank you.
Thank you. On behalf of Aegis Logistics Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.