Aegis Logistics had flat results for Q2 2016 were absolutely flat, even with a 36% rise in revenue. They saw reduced profitability from their liquid terminal division, while the gas division saw a new 40% jump in profit.
The presentation has some interesting stats:
- Greenfield expansion at Haldia for gas and debottlenecking in Mumbai will triple throughput in the next year.
- This will also double their storage capacity, nearly (but they get paid for throughput, not capacity)
- They have done very well with Gas in H1, with 31% increase in EBIDTA and a 28% higher volume of gas carried.
- They also have liquid logistics coming up in Mangalore and Kandla, and some expansion in Haldia, all set for next year. That would indicate a 30% increase in capacity.
- LPG usage in India is set to move up as more people get LPG through the government expansion drive and the fact that there is no or low subsidy now.
- The relatively lower price of crude means that Indian usage is likely to continue to grow, which means more business for liquid/gas logistic players like Aegis.
- We don’t expect the stock to outperform till this capacity expansion is completed.
Disclosure: Please assume author has positions in the stock. This stock may also be in Capitalmind Premium portfolios.
