CD Equisearch

Aegis Logistics (Accumulate)

CMP: ₹189.45

Target: ₹224

Aegis Logistics’ unrivalled expansion plans to build a nationwide port infrastructure and distribution network in the oil and gas sector coupled with the country’s growing energy demand can pave way for higher profitability.

Its complete logistics value chain in the gas division starting from sourcing, terminalling to retail distribution of LPG along with several projects in line for both liquid and gas terminals — greenfield expansion at Haldia, brownfield expansion at Pipavav, debottlenecking of Mumbai terminal, to name a few, should have a positive impact on its business. Robust growth potential coupled with low debt (D/E about 0.5) and industry leading return on capital support premium valuation. However, underperformance of Pipavav liquid terminal may have a dampening effect.

On balance, we maintain our previous ‘Accumulate’ rating with a target price of ₹224 (previous target ₹167) based on 40x FY19e earnings (peg: 1.6) over a period of six to nine.

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