Aegis Logistics Q1FY18 Concall Summary

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Financial Highlights

  • Total revenues for Q1 areRs. 856 Crores versus Rs. 739 Crores, 15.8% growth on YoY basis.
  • Total segment EBITDA for Q1 isRs. 66.8 Crores versus Rs. 56.3 Crores, 18.7% growth on YoY basis.
  • Profit before tax isRs. 49.1 Crores versus Rs. 38.6 Crores, 27.2% growth on YoY basis.
  • Profit after tax for the Company isRs. 46.8 Crores versus Rs. 31.7 Crores, 47.6% growth on YoY basis.
  • Profit after tax after all minority interest isRs. 40.4 Crores versus Rs. 27.5 Crores, 47% growth on YoY basis.
  • Q1FY18 is steady in terms of financials but in the second half FY18 from Q3 onwards company expects a steep jump in profits as the new projects like the Haldia LPG terminal will be fully operationalized.

Liquid Terminal Division

  • The revenues for quarter one areRs. 42.7 Crores versus Rs. 37.6 Crores, 13.5%growth on YoY basis.
  • EBITDA for Q1 for liquid terminal division isRs. 27.9 Crores versus Rs. 21.1 Crores, 32.2% growth on YoY basis.
  • The growth driver is the new capacity which is commissioned in Haldia, which is helping to boost the profits.
  • Other terminals are doing well with the exception of Pipavav,which is still reasonably soft but Q1 FY 2018is better than Q4in FY 2017.
  • Incremental increase in EBITDA in the liquid terminal division of 32% mostly accounted for by the very good performance of the new capacity in Haldia.

Gas Division

  • Revenues for Q1 areRs. 813.3 Crores versus Rs. 701.7 Crores, 11.6% growth on YoY basis.
  • EBITDA for gas division isRs. 38.9 Crores in Q1 versus Rs. 35.1 Crores, 10.8% growth on YoY basis.
  • LPG throughput volumes in two terminals in Mumbai and Pipavav, in Q1 is 301.5 thousand metric tonnes versus 278.6 thousand metric tonnes, 8%growth on YoY basis.
  • The reason behind not so spectacular growth is company not yet got Haldia coming through which should be coming through in Q3.
  • Sourcing volumes for gas is also up 10% on on YoY basis.
  • AGI sold in Q1 is 232,612 metric tonnesversus 211,371 metric tonnes, 10% growth on YoY basis.
  • Packed LPG Cylinders business is basically static, 2,946 metric tonnes in Q1 versus 2,927 metric tonnes, YoY basis.
  • Bulk industrial sales of LPG industrial distribution is very good in Q1 as  it is 8,836 metric tonnes versus 5,231 metric tonnes, 69% growth on YoY basis.
  • Auto gas is 6,204 metric tonnes in Q1 versus 5,763 metric tonnes, 7.7%, growth on YoY basis.
  • Mumbai debottlenecking is done to the extent of one part, which is the Uran pipeline connection, company completed last December nine months ago.
    • Company expected Chakkan pipeline to be ready by October 2017 but HPCL says that now it is delayed up to the March 2018.
    • Once  it is completed (expected in next financial year), it is expected that HPCL will start using this pipeline facility and cutting down road traffic.

Capex And Expansion Plans

  • New capacity in Haldia Phase II which is 35,000 kiloliters will be completed in Q1 of FY2019
  • New capacity in Kandla 100,000 kiloliters, will come on stream in Q3 and Q4, which will boost the liquid terminal revenues in the second half of the year.
  • For gas capacity, company is adding another 10,200 metric tonnes of LPG capacity in Pipavav.
  • Half of this expansion is completed i.e. three spheres of the six spheres are completed, the balance three spheres will be completed by the end of this September ’2017.
  • This expansion will lead to exponential growth in revenues from Q3 & Q4.
  • LPG Terminal Projects
    • Company is working on the next cycle of LPG terminal projects after Haldia.
    • The company is working on at least two LPG projects going forward and it is reaching a stage where company is getting ready to probably start work .
    • It is expected to put these LPG projects before Aegis board very soon, possibly in next board meeting.
    • Company is very near to signing its next LPG project.
    • Next project is still a little further away as company is still doing some commercial negotiations.
    • Company is making good progress on those next two projects and it will bring it to the board of Aegis for approval and after that details like of size of capacities, location etc will be shared, but it is for the future earnings call.
    • Company has received a bulk of the environmental permissions already for the said two projects
    • Company has already identified three possible anchor customer for the new LPG projects.
    • For new projects company is looking for pipeline connectivity similar to Haldia and also for rail & road connectivity.
    • Working with a public sector client for gas project in South India.

  • LPG Bottling Plant in Haldia

    • Though the Haldia project is a bit delayed but company has received in written from HPCL that HPCL is willing to use Hadldia facility asap.
    • Company has not yet been able to get a sourcing agreement and throughput which will be done at Haldia as HPCL is concernedthat they have not released the tender for the supplies for Haldia.
    • Throughput step up jump from the coming quarters will be much more than the sourcing jump.
    • In The Haldia Probject Company’s subsidiary has been financed through loans by the holding companies so once the subsidiary company issues new shares and gets the money from the JV partner ITOCHU it will be the used to pay back the loans of holding company so there will be no tax effect
    • For Haldia LPG project, the mechanical completion is done and a few days ago company started the commissioning of the project with the gassing up process and that is going on.
    • Though the Haldi a LPG project is delayed, company expects to complete commissioning by end of September’ 2017.

Future Outlook

  • For liquid terminal division, company expects continued steady growth for quarter two and bigger revenues and profits in the second half of the financial year.
  • ITOCHU deal is expected to be completed as per the legal agreements next month in October, they will be remitting a Rs. 250 Crores for that equity stake.
  • Company expects a very large jump in profits when the new projects of the Haldia LPG terminal, the Pipavav, LPG terminal, the Kandla liquid terminal, Haldia liquid expansion etc., are commissioned in September.
  • HPCL is an anchor customer in Haldia.
  • Company has already identified and reached an agreement in principal with the anchor customer however not yet signed agreement.
  • Since price of petrol is being revised daily, linkage of prices of CP, LPG does not exist anymore. Resulting better margin for auto gas.
  • Provisioning of taxes is low due to implementation of Ind-As and write back of deferred tax.
  • Due to change in income tax rules, change in base year company will see non cash component in the range of 5-6 crores for all quarters of FY 2018.
  • Current throughput at Mumbai about 80000 tonnes a month, expected to grow once Mumbai-chhakan pipeline will be completed. It is expected to grow to 1.3-1.5 million tonnes per year from currently 1million tonnes.
  • As Reliance is planning to replace propane by ethane to there is a change in opportunity for the Aegis and Aegis will propose backup plan to reliance which should be acceptable to reliance.

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