CD Equisearch

Aegis Logistics (Buy)

CMP: ₹209.75

Target: ₹454

According to the Economic Survey of India 2017 current worth of $160 billion, thanks to the towering needs of businesses to infrastructure and effective logistics management system infrastructure facilities and greater access to global markets, the Government of India aims to improve India’s ranking from 44 in World Bank Logistics Performance Index.

Aegis Logistics, a niche player in gas logistics and distribution, is well positioned to take advantage of oil and gas logistics business in India, owing to its incessant capacity expansion, and infrastructure and distribution network. Its complete logistics value chain in the gas division, starting from sourcing, terminalling to retail distribution of LPG along with third party liquid logistics services for handling and storage as well as providing operations and maintenance services, should bolster its revenue growth in the next two years — expected to grow at However, slow adoption of new technologies has been a big constraint in the Indian logistics industry.

Inadequate port infrastructure and any changes in government policies on coastal regulations pose a threat to terminalling business. Changes in government policy with regards to subsidised pricing of LPG and its substitutes may have a dampening impact on gas division’s performance. We assign ‘buy’ target price of ₹254 (previous target ₹286) based on 33x FY20e EPS of ₹7.7.

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