Buy This Small-Cap Logistics Stock For Target Price Of Rs 315, Will Trade 150% Ex-Dividend Next Week

Edelweiss Wealth Research in its recent report on Aegis Logistics Ltd. suggests buy the stocks of the company for a target price of Rs 315. Considering estimated target price, the stocks are likely to surge 24% in 12 months. Aegis Logistics Q1FY23 performance was in line with the brokerage's expectation, adjusted for deal-related expenses. Softness in throughput volumes was offset by record-high distribution volumes, as the Morbi cluster shifted to LPG from natural gas. Aegis Logistics Ltd. is a small cap logistics company have a market capitalization of Rs 8,925 crore.

Stock Outlook

The stocks of the company today closed at Rs 254.30 apiece after a falling 2.08%. The share price is currently Rs 87.05 above the 52 week low level and Rs 36.7 below the 52 week high level, respectively.

The 52-week low of the stock is Rs 167.25 apiece, which was recorded on 28 February 2022, and the 52-week high is Rs 291 apiece, which was recorded on 10 August 2022, respectively.

The ROE of the stock is 16.40%. TTM PE ratio is 22.64 and the PB ratio is 3.95. TTM EPS is Rs 11.23. The dividend yield is 0.98% and the face value is Rs 1, respectively.

Return on Investments

In the past 1 month, the stocks slid down by 9.81%. Whereas, in the past 1 and 3 months, the stocks moved up by 22.61% and 26.36%, respectively. Over the past 1 year, the stocks gained slid down by 6.9%. In 3 and 5 years, the stocks gave a positive return of 27.79% and 35.19%, respectively.

150% Interim Dividend

Aegis Logistics Ltd has declared an Interim dividend of 150% amounting to 1.50 per equity share. The declared dividend will trade ex-dividend next week on 22 August. The company also announced the record date for the same. The record date is 23 August 2022. The company has declared 39 dividends since August 2010, 2001. In the past 12 months, Aegis Logistics has declared an equity dividend amounting to Rs 4.50 per share, which includes both Interim and Final Dividends.

Q1FY23 performance in line with estimates

EBITDA of Aegis Logistics' Gas and Liquid segments increased 68% and 12% YoY, respectively. Reported EBITDA appears lower at Rs 85cr due to INR62cr expense related to asset transfer under the deal. Adjusted for this, EBITDA of Rs 147cr was in line with our estimates. LPG throughput volumes were up just 12% YoY, as Haldia volumes declined 10% YoY due to jetty maintenance by port authorities. Revenue saw strong revival, led by recovery in sourcing volumes.

LPG distribution segment steals the show

LPG distribution volumes spiked 176% YoY driven by very strong sales to industrial consumers including tile players at Morbi. High natural gas prices led to a shift towards LPG, helping Aegis clock record volumes. Industrial customers bring in considerably high margins for Aegis (Rs 4,000-5,000/t) vs terminal customers (Rs 1,000-1,100/t). The management expects this trend to continue in the near term as LPG remains competitive. Therefore, expectation of incremental Rs 70cr of EBITDA (through Kandla) remains intact as distribution will compensate for softness in Kandla volumes.

New capex plan on track, awaiting balance sheet details

Aegis will report balance sheet under the new structure (consolidated from 25 May 2022) in the next quarter. As of June, consolidated gross debt stands at Rs 900cr while cash is at Rs 1,500cr. Work has started on the Rs 1,250cr new capex plan, but the management will share further details as work progresses and nears commissioning.

Reiterating ‘BUY' as distribution segment will support earnings in near term

At Current Market Price, Aegis Logistics is trading at an attractive valuation of 10.5x FY24E EV/EBITDA. "We trim our FY23/24E EBITDA estimates by 9%/4% to account for the reported numbers and incorporate ramp-up of the Kandla terminal. Aegis Logistics stock price has run-up substantially (up 28% in a month) since our last report; the next catalyst for the stock would be Kandla volume scale-up while strong distribution volumes shall provide cushion in the interim. We reiterate 'BUY' with Target Price of Rs 315/share (broadly unchanged), valuing the stock at 15x Dec'23E EV/EBITDA," the brokerage said.

About - Aegis Logistics Ltd.

Aegis Logistics Ltd. is India's leading integrated Oil, Gas & Chemical Logistics company and one of India's top Importers and Handlers of LPG amongst private players. The company operates through its state-of-the-art Necklace of Liquid & Gas terminals across major ports of India.

Aegis Group was founded in 1956 and is headquartered in Mumbai. As a dominant parallel marketer of Liquefied Petroleum Gas (LPG), Aegis has a robust presence in India. The company has a strong spread of Autogas dispensing Retail Outlets along with a wide network of distributors who sell LPG Cylinders and Appliances to Domestic, Commercial, and Industrial customers. Aegis also provides LPG Installation and Interfuel services that maximize the efficiency and cost benefits of LPG to large industries looking to transition from other fuels to LPG. Aegis LPG is known and respected for its commitment to quality, reliability, safety and assured supplies at all times.

Disclaimer

The stock has been picked from the brokerage report of Edelweiss Wealth Research. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.