Aegis Logistics gas margins drive 1QFY27 beat as capacity expansion accelerates

1QFY27 Earnings Beat

Motilal Oswal Financial Services reported that Aegis Logistics delivered a substantial 1QFY27 earnings beat, led by the Gas division. Revenue stood at Rs 23.6 billion, 26 per cent above the broker’s estimate, while EBITDA of Rs 7.1 billion was 71 per cent above estimate. PAT was Rs 4.8 billion versus the estimate of Rs 2.4 billion. EBITDA margin expanded to 30.3 per cent from 14.0 per cent in 1QFY26.

Gas Division Drives Performance

The Gas division was the principal driver of the quarterly performance. 1QFY27 revenue rose 38 per cent year on year to Rs 21.8 billion, while EBIT increased 4.3 times year on year to Rs 5.8 billion. The Liquids division reported revenue of Rs 1.8 billion, up 24 per cent year on year, and EBIT of Rs 1.1 billion, up 36 per cent.

Gas distribution EBITDA per tonne remained above Rs 7,000 for the second successive quarter, compared with historical levels of around Rs 4,000 per tonne. Management stated that margins can remain around current levels even in a normalised energy-price environment, supported by scaling volumes and procurement efficiencies.

Terminal and Pipeline Expansion

Management outlined a broad terminal and pipeline expansion programme. The 36,000-tonne ammonia storage terminal at Pipavav was commissioned in 1QFY27, with industrial ammonia distribution planned shortly thereafter. Aegis Logistics has also approved a 52,000-tonne refrigerated double-wall steel LPG tank at JNPA.

JNPA is developing 318,000 kilolitres of liquid storage, 77,236 tonnes of LPG static capacity and a 35,000-tonne-per-annum LPG bottling plant, involving capex of Rs 16.8 billion. The first approximately 100,000-kilolitre liquid phase is expected in 3QFY27.

• At Kandla, an additional 94,000 kilolitres of liquid capacity is being developed.
• The Jamnagar-Loni pipeline is complete, while the Kandla-Gorakhpur connection is expected by 1HFY27.
• Other projects include 64,000 kilolitres at Mumbai, 49,577 cubic metres at Kochi by early FY28 and 60,000 cubic metres planned at Mangalore.
• Haldia’s LPG capacity benefits from an exclusive HPCL terminalling agreement through 2038.

Commercial Agreements and Strategic Initiatives

Aegis Logistics has entered into a 15-year take-or-pay contract to handle 0.5 million tonnes annually of petroleum products at Pipavav. It has also signed a 15-year take-or-pay agreement serving Hindustan Zinc’s upcoming DAP plant.

The company signed a non-binding memorandum with Larsen & Toubro for an ammonia terminal for a green-ammonia project. It also signed a non-binding memorandum related to the proposed Vadhavan Port investment, with potential outlay of around Rs 200 billion.

Earnings Outlook and Valuation

MOFSL remains constructive on growth from capacity additions and higher utilisation. It forecasts EBITDA of Rs 18.4 billion in FY27E and Rs 18.7 billion in FY28E, and estimates PAT CAGR of 18 per cent over FY26 to FY28E.

The broker raised its LPG distribution EBITDA-per-tonne assumptions to Rs 6,000 for FY27E and Rs 5,000 for FY28E. However, it believes the current valuation, at 36 times FY28E EPS, already captures the expected capacity and earnings expansion.

MOFSL retains a Neutral rating and a target price of Rs 1,230, valuing Aegis Logistics at 35 times December 2027E EPS of Rs 35.1. The Neutral view reflects the broker’s assessment that the valuation is expensive following the stock’s recent run-up.

Key Monitorables and Risks

• Policy initiatives promoting PNG and reducing LPG dependence could moderate long-term LPG demand growth.
• Execution, financing mix and leverage will remain important as the company progresses its US$5 billion investment pipeline.
• A substantial portion of the investment pipeline may be deployed during FY29 to FY31.