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MOSL: AEGIS LOGISTICS (Buy)- EBITDA below estimate-Haldia ramp-up on track

Aegis Logistics: EBITDA below estimate; Haldia ramp-up on track

(AGIS IN, Mkt Cap USD1.2b, CMP INR273, TP INR318, 16% Upside, Buy)

 

AGIS’s 4QFY18 reported EBITDA of INR699m (+35% YoY; -3% QoQ), below our estimate of INR765m, led by weak performance of liquid terminal division. PAT grew 62% YoY (declined 10% QoQ) to INR483m, lower than our estimate of INR600m due to higher depreciation of INR133m (our estimate: INR86m; +124% YoY, +48% QoQ) and higher than expected minority interest.

• Gas division EBITDA grew 39% YoY (declined 9% QoQ) to INR540m in 4QFY18. While logistics volumes grew 25% YoY (declined 11% QoQ) to 484kmt, sourcing volumes grew 4% YoY (declined 7% QoQ) to 285kmt and distribution volumes grew 35% YoY (2% QoQ) to 21kmt. Logistics volume growth should remain strong led by the ramp-up of Haldia and Pipavav terminals.
• Liquids division EBITDA declined 5% YoY (1% QoQ) to INR242m in 4QFY18. While Mumbai, Kochi and Haldia are operating at full capacity, Pipavav is operating at ~25% utilization. Profitability during the quarter was impacted because of shift in product mix. Kandla and Mangalore terminals are expected to start operations in 1QFY19 and 2QFY19, respectively.
• For FY18, EBITDA grew 29% to INR2.7b and PAT grew 64% to INR1.98b. Gas division EBITDA grew 32% to INR2b and Liquids division EBITDA grew 13% to INR1b.
• Management has recommended a final dividend of INR0.75/share, in addition to an interim dividend of INR0.5/share.