Aegis Logistics Q3FY18 Concall Summary

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Financial Highlights

  • Total revenues for Q3 FY18 were Rs.1,443 crores versus Rs.1,248 crores year earlier that is the rise of 16%.
  • The total segment EBITDA for the company was Rs.83.94 crores versus Rs.69.77 crores year earlier that is a rise of 20% for the Q3 FY18
  • Profit after tax for the company was for the group was Rs.56.44 crores versus Rs.41.43 crores year earlier that is the rise of 36%
  • Profit after tax after minority interest for Q3 FY18 was Rs.53.54 crores versus Rs.36.86 crore year earlier a rise of 45%.
  • EPS for the Q3 FY18 was Rs.1.6 versus Rs.1.1 which was up 45%
  • Earnings per share for the 9M FY18 reached Rs.4.47 versus Rs.2.67 nine months year earlier so that is the rise of 67% at this year so far nine month cumulative in earnings per share

Segment analysis

Liquid Terminal Division

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  • Revenues for the Q3 FY18 were Rs.40.3 crores versus Rs.39.33 crores year earlier so steady.
  • The EBITDA for the division was Rs.24.58 crores versus Rs.23.56 crores steady again.
  • The Haldia liquid terminal remains strong and that the new Kandla liquid terminal the project is almost complete.

Gas terminal division

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  • Revenues for the Q3 FY18 were Rs.1,401.8 crores versus Rs.1,208.7 crores 16% up year-on-year. 
  • EBITDA was Rs.59.36 crores for Q3FY18 versus Rs.46.21 crores year earlier that is a strong rise of 28%

Sales volume analysis

  • The total throughput volumes handled at three terminals was 542,741 metric tons versus 433,725 metric tons year earlier that is a rise of 25% year-on-year
  • It includes whole LPG handled at our terminals including the public-sector throughput, Reliance contract throughput as well as our industrial distribution


Projects

  • This was the 100,000 kilolitre project around 83,000  kilolitre is already complete and the balance 13,000 kilolitre should be completed in the next month

Sourcing volumes

  • LPG sourcing volumes were 305,990 metric tons versus 350,418 year earlier that is a decline of 13% in LPG sourcing volumes
  • It is just that this is the time of year when they are going to the new tenders for 2018. So until that get sorted out I think should they delay some of the volumes until the next year.
  • Packed LPG cylinder volumes for Q3FY18 were up 9% that is 3,496 metric tons versus 3,207 tons earlier. 
  • Bulk industrial distribution was 11,546 metric tons versus 5,647 metric tons a rise of over 100%.
  • Auto gas sales were 6,015 metric tons versus 5,944 metric tons year earlier so steady. 
  • In Q3FY18 34,000 metric ton was the throughput in Haldia and it is ramping up rapidly
  • The Bombay and Pipavav are at full capacity- 283,000 tons in Mumbai and 225,000 tons of throughput in Pipavav.
  • The performance at Haldia is better than expected

Product mix

  • Some changes in product mix depending on which cargo, which products and we have different charging for different product so you might see some changes in revenues and margins because depending on which products come in.
  • Bulk petroleum we charge less than certain chemicals specialty chemicals, etc.
  • The nature of the business is that only then you increase revenues when you are operating at full capacity
  • In LPG, you need to build up more capacity if you want to see greater revenue and earnings

Industry outlook

  • India importing roughly about 10 million tons of LPG
  • By FY35 it will be about 16- 20 million tons
  • The company’s intention is to take around 25% to 30% market share of India’s imports.
  • The company produce these terminals for the next 30-40 years, it is difficult to predict the market demand beyond 2035, but the company will try to cater to the demand

Goa port demand

  • There is a possibility of a considerable demand as much as half a million tons of Demand
  • This could be met from Goa port because this caters to the  bottling plants of the oil companies particularly in Northern Karnataka as well as Goa
  • Some of that is being fed from Bombay some of which is being fed by Mangalore port

Ujjwala scheme

  • LPG consumption is booming including from below the poverty line customers all over the country including in the Northeast where we have just started in Haldia.
  • Target increased to 80 million customers and they have already reached 50 million
  • The scheme will reach the poor eventually- they cannot buy a 14.2 kg cylinder
  • Aegis retailer division or even the public sector can offer them smaller cylinder where the ticket cost is much smaller.
  • Aegis is now selling 4 kg and we are even selling 2 kg
  • The most important thing is get the poor people using LPG, get them connected, get them used to it and then as people become more prosperous, they will use more of it.
  • We should take this as a long term perspective as the government want every household to be using LPG and Aegis just going to have a strong positive impact on demand.

Company Outlook

  • 100,000  kilolitre liquid terminal in Kandla will start
  • Additional land available we can expand more than 100,000 kilometers in the future
  • Haldia LPG volumes sales started in Q3 FY18 and we will see a big jump in Q4 FY18.
  • Pipavav and the Mumbai terminals are concerned both are operating at full capacity and we expect to maintain these high volumes through 2018.
  • The Kandla and the Haldia expansion, you know we have a 50,000  kilolitre expansion going on in Haldia liquid and in the Kandla 100,000  kilolitres, these are going to be main growth for the liquid revenues in the next year.
    Haldia project
  • 500,000 to 600,000 metric ton budget in terms of volume so that was a 12 month- from Q3 FY18 to Q3 FY19
  • Over the next 5 years, we reach 100% capacity of utilization of 2.5 million tons
    Annualized throughput capacity
  • Mumbai throughput was almost on 2,83,000 tons
  • The company is operating at full capacity in Mumbai at the moment, probably more than full capacity and it is difficult to sustain that every single day for 365 days, so we do not annualize Q3 FY18

Tendering status for the sourcing business

  • Update in the next quarter

Plans for Kandla liquid terminals

  •  No updates for now, till its get operational

Updates on the new projects

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  • 1st one is getting closer to kind of contractual stage.
  • The project will be the largest LPG terminals that Aegis has done in its whole history
  • 2nd one is in negotiating phase
    HPCL Uran Chakan pipelone
  • The HPCL part would be done in next 3-6 months, probably

BPCL terminal on the East Coast

  • No updates

IOCL

  • Constructing polypropylene plant in their Paradip refinery
  • It effectively takes away part of their LPG which currently they must be distributing in the eastern region.
  • Bulk of the Haldia market is really going to be just imports of LPG through the terminals in Haldia rather than from Paradip.

Customer strategy

  •  Focusing on existing customers
  • Continuing expanding the auto gas network

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