Aegis Logistics-Initiating Coverage - 10.07.2020 - Equiris

Aegis Logistics
Initiating Coverage
Play on India’s rising LPG imports; initiate with LONG
Active LPG Connections (mn) | LPG Coverage (%) 97%

94%
73% 81%
62%
56%
149mn 167mn 199mn 224mn 265mn 276mn
FY15 FY16 FY17 FY18 FY19 FY20
July 10, 2020
Depesh Kashyap, CFA (depesh.kashyap@equirus.com, +91-7228934327)

Narendra Mhalsekar (narendra.mhalsekar@equirus.com, +91-9765134996)
India Equity Research | Logistics
July 10, 2020
Initiating Coverage
Aegis Logistics
CMP Target Price
Rs 180 Rs 310
Play on India’s rising LPG imports; initiate Dec 2021
with LONG
Rating Upside
LONG 72% ()
➢ India is among world’s top 3 LPG consumers and its demand is pegged to increase Vote for Equirus at
34% by 2025 (as per Indian Oil Ministry). India imports 50% of its LPG requirements, Asiamoney Broker Poll'20
and LPG imports are expected to double by FY35, in terms of quantity.
➢ In FY20, Aegis Logistics (AEGIS) handled ~21% of India’s total LPG imports at its Stock Information
terminals in Mumbai, Haldia and Pipavav (FY15: 8%). Investments in newer terminals
Market Cap (Rs Mn) 61,174
and better evacuation modes will drive a 17% EBITDA CAGR in gas over FY20-FY23E.
52 Wk H/L (Rs) 267/107
➢ In the liquid segment, we estimate a 7% EBITDA CAGR over FY20-FY23E on
Avg Daily Volume (1yr) 286,556
expanding capacities at Kochi, Haldia, Kandla and Mangalore terminals.
Avg Daily Value (Rs Mn) 0.7
➢ Overall, we forecast a 16%/18% EBITDA/PAT (adjusted for ESOP expenses) CAGR
Equity Cap (Rs Mn) 7,740
over FY20A-FY23E. Initiate coverage with LONG and a DCF-based Dec’21 TP of Rs
Face Value (Rs) 1
310, implying a PE multiple of 24x/20x FY22E/FY23E.
Share Outstanding (Mn) 339.7
Bloomberg Code AGIS IN
LPG imports continue rising to satiate ever-growing demand: GoI’s push to provide clean Ind Benchmark SPBSMIP
cooking fuel to households has turned India into the world's top 3 LPG consumers. While
consumption is set to grow steadily with demand from household and industries, production Ownership (%) Recent 3M 12M
constraints will continue to drive imports. India imported ~56% of its LPG requirements in Promoters 59.6 0.0 (1.0)
FY20, taking total LPG imports to 14.7MMT, up from 20% in FY09. According to industry DII 2.2 (0.2) (0.4)
estimates, LPG imports are expected to further double by FY35. FII 12.7 0.3 0.6
AEGIS – a key beneficiary of India’s LPG offtake: AEGIS’ gas segment EBITDA has grown Public 25.6 (0.1) 0.7
at 42% CAGR over FY15-FY20 led by timely investments in gas terminals at Haldia and
Pipavav, which has led to market share gains. In FY20, AEGIS handled ~21% of India’s
total LPG imports at its terminals in Mumbai, Haldia and Pipavav (up from 8% in FY15).
The company is currently working on setting up its largest LPG terminal at Kandla with a
throughput capacity of 4MMTPA. With the Kandla terminal coming on board and better
evacuation modes (pipeline/rail) at existing terminals, we estimate 17% gas EBITDA CAGR
(FY20-23E) as handling market share touches 29% by FY23E.
Liquid segment to grow on newer capacities: Liquid segment is largely a cash cow for
AEGIS wherein EBITDA growth has been flattish over the last five years. Except Pipavav,
other terminals continue to operate at 100% utilisation. With AEGIS working on expanding Relative price chart
capacities at Kochi, Haldia, Kandla and Mangalore terminals, we estimate a 7% EBITDA 265
AGIS IN Nifty Index
CAGR (FY20-23E) in the liquid segment. Also, there is a limited threat to AEGIS’ market 240
share due to its longstanding relationships with OMCs and chemical companies. 215
190
Initiate with LONG, Dec’21 TP of Rs 310: With strong tailwinds in the gas segment, we 165
140
estimate 16%/18% EBITDA/PAT (Adjusted for ESOP expenses) CAGR over FY20A-FY23E. 115
Post Kandla expansion, we expect minimal capex requirements and free cash generation 90
Mar-20
Sep-19
Jun-19
Dec-19
of Rs 9.6bn over our forecast period. Initiate coverage with LONG and a DCF-based
Dec’21 TP of Rs 310, implying PE multiple of 24x/20x on FY22E/FY23E. Source: Bloomberg
Financial Summary This report is solely produced by. The following person(s) are
EV/ Core EBITDA responsible for the production of the recommendation:
YE Mar Recurring EPS P/E P/B ROE
Sales EBITDA EBITDA ROIC Margin
Rs mn PAT (Rs) (x) (x) (%) Depesh Kashyap, CFA
(x) (%) (%)
FY20A 71,833 5,153 3,384 10.0 18.1 3.7 11.8 23.2 25.1 7.2 depesh.kashyap@equirus.com
+91-7228934327
FY21E 52,878 5,349 3,288 9.5 18.9 3.2 11.3 18.8 19.8 10.1
Narendra Mhalsekar
FY22E 68,301 7,066 4,628 13.2 13.7 2.7 8.1 22.1 24.1 10.3
narendra.mhalsekar@equirus.com
FY23E 77,801 8,029 5,586 15.9 11.3 2.3 6.6 22.0 26.5 10.3 +91-9765134996
Source: Company, Equirus Securities
Refer to important disclosures at the end of this report July 10, 2020| 1
Aegis Logistics (AGIS IN) India Equity Research | Initiating Coverage
AEGIS: Story in charts
Exhibit 1: India’s LPG consumption has grown at CAGR of 7% …. Exhibit 2: ..led by domestic segment (90% of total consumption)
LPG Consumption ('000 MT) 2.4% 0.9%

30,000
6.5%
25,000
Domestic
20,000
Non-Domestic
15,000
Industry
10,000 Auto LPG

12,191
13,135
14,331
15,350
15,601
16,294
18,000
19,623
21,608
23,342
24,907
26,395
5,000 90.0%
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Equirus, Industry Data Source: Equirus, Industry Data
Exhibit 3: Gas segment for AEGIS has been driving overall EBITDA… Exhibit 4: … and Gas segment also makes much higher ROCE
Gas segment Liquid segment Gas - ROCE (RHS) Liquid -ROCE (RHS)
100% 80%
68%
90% 25% 25% 70%
80% 38% 34% 57%
46% 60% 52%
70% 57%
50% 45%
60% 42%
38%
50% 40%
40% 75% 75% 30% 21% 20%
30% 62% 66%
54% 20% 15%
11% 10%
20% 43% 8%
10%
10%
0%
0%
Source: Equirus, Company Data Source: Equirus, Company Data
Exhibit 5: Investments have largely been made in Gas segment Exhibit 6: ..leading to higher overall returns for the company
Gas segment capex (Rs mn) Liquid segment capex (Rs mn) ROE ROIC
2,500 25%
2250 22% 22% 22%
2125 2146
19% 19%
2,000 20% 18%
17% 21%
20% 20%
1500 15%
1,500 1337 1336 15% 18%
17% 16% 16%
14%
1,000 807 820 10%
504 572 550
500 349 400 400
302 300 5%
0
0%
FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
July 10, 2020| 2

Contents
LPG imports continue to rise to satiate ever-growing demand ...............................4
Inter-regional supply-demand gaps drive international LPG trade .......................... 4
Government promotes LPG as domestic cooking fuel ............................................. 5
Non-domestic usage of LPG to gain traction ............................................................ 9
Auto LPG – the most efficient fuel .......................................................................... 12
Increase in LPG consumption mainly supported by imports .................................. 14
Current refinery capacities inadequate, import dependence may increase .......... 14
AEGIS – a key beneficiary of India’s LPG offtake .................................................. 18
Sourcing growth outpaces Indian LPG imports....................................................... 18
Gas logistics segment driving profitability .............................................................. 19
Gas distribution in industrial/commercial, auto LPG gaining traction ................... 24
Liquid division – end of capex cycle to ensure returns pick up .............................. 26
Storage capacities at key ports lend strategic advantage ...................................... 26
Changing product mix at new facilities to drive liquid segment growth ................ 28
Return ratios to improve in next few years ............................................................ 28
Competitors are also customers! ........................................................................ 29
Initiate with LONG, Dec’21 TP of Rs 310 .............................................................. 30
Gas segment to drive 17% EBITDA (adjusted) CAGR over FY20-FY23E .................. 30
FCF of Rs 9.6bn over FY21-FY23E led by solid cash conversion .............................. 31
Capacity expansion have largely been funded by internal accruals ....................... 32
Return ratios to improve on better utilisation ....................................................... 33
Grants ESOPs of Rs 3.5bn to senior employees ...................................................... 33
COVID impact – largely limited to distribution business ........................................ 34
Valuation ................................................................................................................. 35
Comparison with global companies........................................................................ 37
Investment risks ...................................................................................................... 39
Corporate governance ....................................................................................... 41
July 10, 2020| 3

LPG imports continue to rise to satiate ever-growing demand

Inter-regional supply-demand gaps drive international LPG trade
Liquefied Petroleum Gas (LPG) or simply propane, is used as fuel for household and commercial
purposes, for industrial processes, as an alternative auto fuel and as a feedstock in petrochemicals. Of
LPG supply globally, 45% comes from crude oil refining, 35% accompanies NG production and
remaining comes with crude oil production.
Major LPG producers include the Middle East, US/Canada and Asia Pacific, with each accounting for
Most incremental LPG exports ~20% of the global output. Asia Pacific accounts for one-third of global demand, followed by North
absorbed by India and China given America and Europe. Shale gas revolution in the US led to a sharp increase in its LPG production,
govt. thrust on cleaner fuel while demand was broadly stable. This shored up US LPG exports from 53k barrels/day in 2005 to
1.65mn barrels/day in 2019, turning it into the world’s largest LPG exporter. Most incremental exports
are being absorbed by Asian countries, especially India and China, where there is an opportunity and
govt. thrust to replace biomass, kerosene, and coal with cleaner fuel (LPG).
Exhibit 7: Middle East and US lead in global LPG production Exhibit 8: Asia Pacific is driving global LPG consumption
Other Refinery Other Gas US/Canada US/Canada Latin America Europe/CIS

CIS Middle East China & India Refinery Middle East Asia Pacific Africa
400
400
350
350
300
300
250 250
200 200
150 150
100 100
50 50
0 0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
2021E
2022E
2023E
2024E
2025E
2019E
2020E
2021E
2022E
2023E
2024E
2025E
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exhibit 9: US LPG exports have risen sharply post shale gas revolution
US LPG exports ('000 barrels per day)

1,800
1,600
1,400
US LPG exports up from 53k 1,200
barrels/day in 2005 to 1.65mn 1,000
barrels/day in 2019 800
600
400
200
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Equirus, EIA
July 10, 2020| 4

India is among world’s top 3 LPG consumers

GoI’s push to provide clean cooking fuel to households has turned India into the world's top 3 LPG
India and China are set to drive global consumers with demand projected to rise 34% by 2025, as per Indian Oil Ministry. India’s LPG
LPG consumption consumption for FY20 stood at 26.4mn MT with 6% growth yoy; of this 26.4mn MT, India imported
about 14.7mn MT. Bulk of the imports came through PSU entities. About 90% of LPG consumption
happens as domestic cooking fuel, 6.5% as commercial cooking fuel, and the remaining as
bulk/industrial fuel and as AUTO LPG (cleaner, more economical than petrol/diesel).
Exhibit 10: LPG consumption has grown at CAGR of 7% Exhibit 11: Domestic use accounts for 90% of total LPG consumption
LPG Consumption ('000 MT) 2.4% 0.9%

30,000
6.5%
25,000
Domestic
20,000
Non-Domestic
15,000
Industry
10,000 Auto LPG

12,191
13,135
14,331
15,350
15,601
16,294
18,000
19,623
21,608
23,342
24,907
26,395
5,000 90.0%
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Equirus, PPAC Source: Equirus, IOC
Government promotes LPG as domestic cooking fuel

India’s active domestic LPG customers at 276mn as of Jan’20. Total PMUY beneficiaries stood at
80mn. The year 2016 was declared as the year of LPG by GoI. Till Jan’16, LPG penetration was only
at 62% of India’s population with 166mn connections but increased to 96.9% as of Jan’20 (with
Though penetration of LPG 276mn customers. This has led to a 9% CAGR in LPG consumption over the last five years. LPG has
connections has reached 97%, but emerged as a preferred household fuel with its demand not likely to fall anytime soon, more so given
overall usage remains low as people GoI’s commitment to 100% LPG penetration.
often switch to traditional fuels to save
Though penetration of LPG connections has increased, but overall usage remains low as people often
costs.
switch to traditional fuels to save costs. As per NSO survey in Dec 2018, about only 48.3% of the
households in the rural areas and about 86.6% of the households in the urban areas used LPG as fuel
for cooking. With 44.5% of households in rural still using firewood and government’s thrust towards
eliminating usage of firewood, there is a huge potential for growth in rural LPG consumption.
Exhibit 12: LPG penetration has now reached ~97% helped by PMUY Exhibit 13: ….but potential for increase in domestic LPG usage remains
scheme…… huge
Active LPG connections (mn) LPG Coverage (%) Share of fuel for domestic cooking Rural Urban Total
300 120%
94.3% 96.9%
250 100% Firewood, Chip 44.5% 5.6% 31.2%
80.9%
200 72.8% 80% LPG 48.3% 86.6% 61.4%
61.9%
56.0%
150 60%
Dung Cake 5.5% 0.5% 3.8%
100 40%
Others 1.1% 3.2% 1.8%
50 20%
148.6 166.3 198.8 224.3 265.4 275.9 No cooking arrangement 0.6% 4.1% 1.8%
0 0%
FY15 FY16 FY17 FY18 FY19 FY20 All 100% 100% 100%
Source: Equirus, PPAC Source: Equirus, NSO
July 10, 2020| 5

Exhibit 14: Government focus to promote household consumption of LPG
Year Government Policies Description
• Launched in 2009 to cover more rural households

• Aimed at setting up small size LPG distribution agencies in rural and to cover remote
2009 Rajiv Gandhi Gramin LPG Vitaran (RGGLV) as well as low potential areas
• Since the launch till 2015, 4,000 new domestic cooking gas distributors had been
rolled out across the country
• Under the scheme, free gas connections along with LPG filled cylinders, two burner
gas stove, regulator and safety pipe were issued to the Jhuggi Ration Card (JRC),
Below Poverty Line (BPL) and Antodaya Ann Yojana (AAY) ration card holders who
2012 Kerosene Free Delhi
were using kerosene oil for cooking.
• Around 2 lakh applications were received and 90% of them were provided with LPG
connections in Delhi
• The scheme required the consumer to mandatorily have an Aadhaar number for
availing LPG Subsidy.
• Through the scheme, customers were required to purchase LPG at market price and
the subsidies were credit directly to the registered bank account for up to 12
2013 PAHAL (DBTL)
cylinders a year.
• This enabled the government to get rid of fictitious accounts and also in stopping the
diversion of household cylinders for commercial purposes while rationalizing its
subsidy bill.
• A scheme that appeals to well-off citizens to voluntarily surrender their subsidies to

give back LPG connections to poor households.
2016 GiveItUp Campaign
• As of 2019, nearly 10mn households or close to 4% of the active connections have
given up the subsidies
• In a bid to make the LPG distributorship more broad based, participative and
transparent, the government issued new unified guidelines for selection.
2016 Unified Guidelines for Selection of LPG Distributorships 2016 • Eligibility norms for age, education, fund requirement and ownership of land for
godown & showroom had been relaxed, 33% reservation to women were provided
along with other measures
• A scheme launched to provide LPG connections to 50mn women belonging to the

Below Poverty Line (BPL) families over a period of 3 years starting from FY17.
2016 Pradhan Mantri Ujjwala Yojana (PMUY) • The scheme's objective was to provide clean cooking fuel solution to poor
households in rural areas.
• A total of 80mn connections have been registered under the scheme as of Jan'20
• Under the Pradhan Mantri Garib Kalyan package, over 80 mn PMUY beneficiaries
are eligible to get three free cylinders over the April-Jun 2020.Free cylinder scheme
2020 PM Gareeb Kalyan Package (Post Covid) has been further extended till Sept’20
• 85 mn PMUY LPG cylinders have been booked and delivered for April and May
2020.
Source: GOI, Equirus
July 10, 2020| 6

Owing to limitations with traditional fuels and the associated health hazards, there was a strong reason
Subsidisation of set-up cost leads to to promote LPG as a cooking fuel in rural areas (GoI committed to 100% LPG penetration in India).
LPG proliferation in rural India The biggest barrier to LPG ownership was the initial cost of set up, which GoI subsidised under PMUY;
this led to LPG proliferation in rural India. Healthy domestic GDP growth and rising disposable income
should further lead to an increase in per capita consumption of LPG.
Exhibit 15: Cooking fuels before PMUY Exhibit 16: Increase in LPG coverage due to PMUY
80% PMUY beneficiaries (mn) - RHS LPG Coverage
69%
70% 120.0% 90
94.3% 96.9% 80
60% 100.0%
80.9% 70
50% 72.8%
80.0% 60
61.9%
40% 50
60.0%
30% 40
18% 40.0% 30
20%
12% 20
10% 20.0%
2% 10
20.0 35.6 71.9 80.3
0% 0.0% 0
Firewood LPG Kerosene Others FY16 FY17 FY18 FY19 FY20
Exhibit 17: LPG customers on the rise Exhibit 18: Increase in LPG coverage due to PMUY
Active LPG connections (mn) LPG Coverage (%) Estimated households (mn) Active LPG connections (mn)
300 120% LPG Coverage (%)
285
94.3% 96.9% 110.7% 276
300 103.8% 120%
250 100%
80.9% 250 90.0% 88.1% 100%
83.5%
200 72.8% 80% 96.9%
200 80%
61.9%
56.0% 150 60%
150 60%
100 76 84 64 54 66 59 68 70 40%
100 40%
50 11 10 20%
50 20% 0 0%
East
West
North
North-East
India
South
148.6 166.3 198.8 224.3 265.4 275.9

0 0%
July 10, 2020| 7

LPG & PNG to play a vital role in India’s clean cooking energy vision
GoI is trying to improve access to clean cooking energy by promoting LPG, while also pushing electricity
and piped natural gas (PNG) for meeting cooking energy demand in urban India. Under PMUY, GoI
has provided LPG connections to 97% of Indian households; however, recent surveys suggest massive
fuel stacking in households. It suggested that only 1/3rd of rural population in Jharkhand, Madhya
Pradesh, Odisha, UP and West Bengal use LPG as primary cooking fuel while the rest of the population
still uses to older ways of cooking. As highlighted earlier, LPG usage was only about 48.3% of cooking
fuel usage in rural in 2018.
Exhibit 19: 2047 projections for cooking fuel in rural India Exhibit 20: 2047 projections for cooking fuel in urban India
90% 60%
80%
50%
70%
60% 40%
50%
30%
40%
30% 20%
20%
10%
10%
0% 0%
LPG
PNG
LPG
PNG
LPG
PNG
LPG
PNG
Biomass
Biomass
Electricity
Biogas
Electricity
Biogas
Electricity
Biogas
Electricity
Biogas
Business as Usual Ambitious effort scenario Business as Usual Ambitious effort scenario
Source: Equirus, NITI Aayog Source: Equirus, NITI Aayog
While LPG remains the primary cooking fuel option across India, GOI is ramping up efforts to decrease
this dependence in urban India by making efforts to scale up its City Gas Distribution (CGD) network.
LPG has an advantage over PNG in terms of ease of installation and transportation to remote locations;
however, in terms of pricing, they are broadly similar at current rates.
Exhibit 21: PNG and LPG – consumer cost dynamics

LPG (Non-
LPG (Subsidized) PNG
Subsidized)
Rs 555-590 Rs 616
Retail price per cylinder (Rs) NA
per 14.2Kg per 14.2Kg
While PNG and LPG have similar costs Per unit retail price (Rs) (a) 39-42/kg 43/kg 27 – 31 / scm
(per unit energy basis), installation cost
Gross calorific value (unit) (b) 11,900 (Kcal/kg) 11,900 (Kcal/kg) 9500 (Kcal/scm)
for LPG is much cheaper
Effective price paid (Rs/’000Kcal) (a/b) 3.3-3.5 3.6 2.9-3.3
Installation cost (incl. Security deposit) (Rs) 2400 6500
Source: Equirus, AEGIS, Gujarat Gas, HPCL; *Prices as on 16 Jun’20
Currently, LPG household connections stand at 276mn vs PNG household connections at just 5.4mn
and that too limited to Delhi, Maharashtra, and Gujarat. Laying a PNG pipeline is capital intensive
compared to setting up of a distribution network for LPG. Under the 9th & 10th rounds of bidding for
CGD networks, the number of PNG connections are expected to increase by ~42mn over the next 8-
10 years.
July 10, 2020| 8

Exhibit 22: LPG demand to remain steady with more rural India focus Exhibit 23: Ramping up PNG to ease dependence on LPG in urban
India (PNG domestic connections ‘000)
LPG Demand (MMT)

50,000 47,596
50 45,000
45 40,000
44.8
41.9 35,000
40 40.1 30,000
38.4
36.9
35 35.5 25,000
34.1
32.8 20,000
31.5
30 29.2 15,000
25 25.5 10,000 5,404
2,758 3,230 4,202
5,000 2,634
20
0
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
FY37
FY38
FY39
FY40
FY15 FY16 FY17 FY18 FY19 FY29E
Source: Equirus, IOCL Source: Equirus, MoPNG
Non-domestic usage of LPG to gain traction

Globally, non-domestic LPG consumption forms 51% of overall usage; in India however, LPG is still
largely used for domestic cooking purposes (~90%). LPG finds usage in various commercial and
industrial applications and its usage is only set to increase ahead.
Exhibit 24: Non-domestic consumption forms 51% of global LPG Exhibit 25: In India, LPG is largely used for domestic consumption
demand
2.4% 0.9%
2.0%
9.8% 6.5%
Residential
5.9%
Petrochemical Domestic
49.0% Industrial Non-Domestic

11.8%
Refinery Industry
Agriculture Auto LPG
21.6% Other Sectors

90.0%
Source: Industry data, Equirus Source: Industry data, Equirus
Exhibit 26: India moving from urban to rural; commercial uses of LPG to improve
Future
•Growth expected from
non cooking uses
Ujwala
•Domestic growth back on
track due to increase in
Pahal penetration
•Growth vitnessed in •Shift from Urban to Rural
commercial sector
Pre Pahal •Domestic growth
•Mainly domestic curtailed
•Negligible growth in
other sectors
Source: Company Data, Equirus
July 10, 2020| 9

India is the second-largest energy consumer in Asia with per capita consumption at 1/3 of global
average of 1,920 Kg of oil equivalent. Robust growth in prosperity and population size is expected to
drive a massive increase in India’s primary energy consumption, which is set to expand by 1.2bn MT
of oil equivalent or 156% by 2040, making India by far the largest source of energy demand growth,
according to BP Energy outlook.
Exhibit 27: Energy consumption pattern in India Exhibit 28: Commercial and industrial energy sources
Other Others
7% 8%
LPG Coal
Agriculture 10% 25%
18%
Industrial
Oil
45%
12%
Commercial
8% Electricity
13%
Bio Fuels PNG

Domestic
25% 7%
22%
Source: Company Data, Equirus Source: Company Data, Equirus
Commercial and industrial LPG consumption accounts for 9% of total LPG consumption while auto
LPG constitutes 1%. LPG competes with solid fuels, PNG, LDO, HSD, FO, biomass/waste; however,
its adoption for commercial usages is set to be driven by economics and environmental concerns.
Exhibit 29: LPG non domestic usage – potential market

Industry Potential market
• LPG is used in drying, singeing, calendaring, dyeing, and processing activities in textiles.
• It is also used in tanneries to heat water and drying for dehydration of skin.
Textile Industry
• In singeing and processing, approximately 1 TMT of LPG is consumed and as per industry
estimates, approx. potential for LPG consumption stands at 50 TMTPA.
• LPG is used in Annealing, Billet Heating, Melting, Descaling, Stress Relieving, and Pre‐heating.
• Currently, predominant sales of LPG for this sector are in Orissa.
• Approximate LPG consumption in a mini steel plant is about 2 TMT and for an integrated steel
plant it is about 6 TMT.
Metallurgy industry
• As per industry estimates, approx. potential from the steel industry stands at 1.5 MMTPA
• LPG is also used in Galvanisation – Immersing Steel parts on Molten Zinc to form an alloy (450
ºC); Metal Surface Treatment - Prevent Oxidation: Painting, Plastic coating, Enameling; Oxy Fuel
Cutting - Fuel with pressured Oxygen used to cut thick metals.
• The glass industry consumes LPG for its Melting (1500 ºC), Processing (1200 ºC), Stress reliving
(600 ºC) activities.
Glass & Ceramic • As per industry estimates, Glass industry LPG consumption potential stands at 10TMTPA.
Industry
• In tiles, slabs & brickworks, energy is used for drying, firing & enameling (Tiles).
• In potteries, clay pots are dried and fired at a different temperature, based on the clay used.
July 10, 2020| 10

• LPG in its natural odourless form is best suited for the aerosol industry and is an ideal propellant.
• The top-12 deo spray brands in the market are growing at 5 -7% and approximate consumption
AEROSOL Industry
of LPG in the industry stands at 4TMTPA.
• Approximate potential for LPG consumption stands at 30TMTPA
• Agriculture: LPG is used in intensive cropping systems where a high level of heat is required to
kill weeds, germs or diseases that may be present in the ground. LPG is often used in crop drying
because of its highly controllable nature.
• Tea Industry: In a tea factory, machineries run with electricity and heating, drying activities are
done with coal. Electricity & coal requirements for heating and drying can converted from Coal
Agriculture & to LPG. Expected annual volume of 300 TMTPA for approximately 4500 Million Kg Tea
Farming production of India.
• Poultry Farming: Ambient air Temperature has huge impact of growth of poultry
• Green Houses: used for CO2 production and heating water & Air to maintain temperature
• Drying Cereals: Removing water content from Cereals by drying
• Drying Wood: A drying needs a temperature of 60 to 90 ºC for days to reduce humidity
• Besides commercial usage in cooking, LPG has widespread usage in the food industry.
• Dry Fruits: removing water vapor content from fruits/ vegetables
• Bakeries, Biscuit & Cracker factories: pre-baking, Baking, toasting in Ovens
Food Industry • Making Drinks: Washing & rinsing bottles, sterilization, distillation & brewing
• Canning & bottling: Sterilization of Packaged food for long shelf life
• Meat Curing & salting: Dehydrating fresh meat for food preservation
• Dairy & Cheese Making: Sterilization, Pasteurization of milk & cream, Atomizing
Source: Equirus, WLPG Data
July 10, 2020| 11

Auto LPG – the most efficient fuel

Auto LPG is the most effective option for converting petrol-fuelled cars and bikes into more eco-friendly
vehicles and helps avoid usage of high-polluting diesel-fuelled cars. Auto LPG is environment friendly,
economical, convenient, safe, and easily available, and can easily replace fuels with higher carbon
emissions. Hence, it has been promoted globally for many decades now.
Even as India stands among top 3 in overall LPG consumption, it is 18th globally in LPG consumption
for transport
Exhibit 30: Global auto LPG consumption Exhibit 31: India’s growth in Auto LPG consumption
Auto LPG Consumption MMT (FY18)
Auto LPG volumes (TMT) YoY %
South Korea 3.30 450 221% 250%
Turkey 3.20 400 200%

147%
350
Russia 3.10 135% 150%
300
Poland 1.91 250 100%
53% 38%
Italy 1.67 200 17% 50%
3% 1% -4% -7% 5% 14% 2%
150 -9% -11%
Thailand 1.32 0%
100
176.3
269.7
245.4
338.6
348.8
352.3
338.2
314.5
279.9
327.5
343.9
392.0
400.0
Japan 0.72 -50%
30.4
75.0
50
9.5
…. 0 -100%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
India 0.40
Source: Equirus, WLPGA Source: Equirus, IAC
Lower LPG penetration in transport can be attributed to inadequate infrastructure (compared to

MS/HDS or CNG) even as a network of Auto LPG dispensing stations (ALDS) have been set up across
the country. Also, diversion of subsidised household LPG cylinders towards consumption in auto and
lack of awareness have curtailed growth in auto LPG consumption. However, GoI’s DBTL and Pahal
schemes are helping reduce this diversion and increase auto LPG consumption.
Both CNG and LPG powertrain systems are cheaper and more eco-friendly in cars than diesel or
Autogas more economical than any
gasoline systems. With GoI’s intent to reduce dependence on petroleum imports and for cleaner
automotive fuel
environmental emissions, it started promoting NG usage. According to industry estimates, India has
NG reserves that can last up to 27 years with current demand while crude reserves only about 5-7
years. GoI’s focus has led to a wide improvement in CNG infrastructure across the country and
subsidies provided have made it as an attractive fuel.
Trends in CNG consumption may change as auto LPG is now cheaper than CNG across markets in
India on a Rs/per km basis. AutoGas (LPG) prices are on an average 40% cheaper than petrol in
metros.
Exhibit 32: Autogas economics better than CNG at current prices

Fuel variant Mileage Price in Delhi (Rs)* Rs/Km Cost of Kit (Rs)
Petrol 15 Kms/Ltr 76/Ltr 5.0 -
Diesel 17 Kms/Ltr 75/Ltr 4.4 -
LPG 17 Kms/ltr 39/ltr 2.3 20,000-30,000
CNG 12 Kms/ltr 31/Ltr 2.6 35,000-60,000
Source: Equirus, Industry Data, Prices as on 16th Junel’20
AutoGas prices in India depend on import parity price (IPP) of LPG and alternate fuel prices and are
subject to revision once in a month. CNG prices depend on sourcing NG prices that are reset twice a
year (April & October) based on a pricing formula. But there is no schedule to reset CNG retail prices
and retailers can revise their rates based on market conditions (change in transmission cost, prices of
alternate fuels)
July 10, 2020| 12

Exhibit 33: Currently, Autogas is the most efficient fuel (Rs /Km)… Exhibit 34: …though prices are more volatile than CNG
AutoGas (Rs/Ltr) CNG (Rs/Kg)

6 60
55
5 50
45
4
40
3 35
30
2 25
20
1
11/1/2018
11/1/2019
1/1/2018
3/1/2018
5/1/2018
7/1/2018
9/1/2018
1/1/2019
3/1/2019
5/1/2019
7/1/2019
9/1/2019
1/1/2020
3/1/2020
5/1/2020
7/1/2020
5.0 4.4 2.3 2.6
0
Petrol Diesel Autogas CNG
Source: Industry Data, Equirus Source: Industry Data, Equirus
July 10, 2020| 13

Increase in LPG consumption mainly supported by imports

Even as LPG consumption has increased steadily over the years, domestic production has not caught
up; hence, LPG imports have increased at a ~18% CAGR over FY09-FY20. India imported about 56%
of its LPG requirements in FY20, taking total LPG imports to 14.7mn MT, up from 20% in FY09.
Exhibit 35: LPG demand-supply shortfall has been widening…. Exhibit 36: …with imports plugging the gap
LPG Consumption (mn MT) LPG Production (mn MT) LPG imports (mn MT) Import share of consumption
28 26.4 16 100%
26 24.9
23.3 14 90%
24 21.6
22 80%
19.6 12
20 18.0 70%
16.3
18
15.3 15.6 10 51% 49% 53% 56% 60%
16 14.3 46% 46%
13.1 12.4 12.8 12.8
14 12.2 8 50%
11.3 38% 40% 40%
12 10.3 9.6 9.6 9.8 10.0 9.8 10.6
9.3 6 31% 40%
10
8 20% 21% 30%
4
6 20%
4 2
11.1
11.4
13.2
14.7
10%
2.4
2.7
4.5
5.8
6.3
6.6
8.3
9.0
2
0 0 0%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Equirus, PPAC Source: Equirus, PPAC
India mainly imports LPG via term contracts from major Middle Eastern producers and USA. It is highly
unlikely that Indian refineries will ramp up LPG production; hence, we expect India to continue relying
on imports for over ~50% of its LPG needs.
Exhibit 37: LPG demand is set to outpace the supply
LPG Demand (mn MT) LPG Supply (mn MT)

45
40
35
30
25
20
Imports
15
10
5
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Source: Equirus, IOC, AEGIS Logistics
Current refinery capacities inadequate, import dependence may increase

LPG produced in India by refineries is about ~5% of total crude processing capacity. The yield depends
on the quality of crude oil, complexity of the oil refinery and economic benefits of producing LPG over
oil products. In India, LPG is produced by both PSU refiners as well as private firms. However, Indian
refineries are more optimally designed to produce MS/HSD fuels and have lower LPG yields, which in
turn limits domestic LPG production. Moreover, with abundant LPG availability in international markets,
Indian oil companies are unlikely to dramatically increase LPG production.
July 10, 2020| 14

Exhibit 38: LPG supply chain
Source: Equirus
Exhibit 39: Total Indian crude refining capacity at ~250MMTPA; low LPG yield limits domestic LPG production
Bathinda
(11.3) Panipat
(15.0)
Bongaigaon Digboi
(2.4) (0.7)
Mathura
(8.0) Guwahati
(1.0)
Numaligarh
Barauni (3.0)
(6.0)
Koyali
EOL Vadinar
(13.7) BORL, Bina
(20.0)
(7.8)
RIL Haldia
RIL (7.5)
(33.0)
(35.2)
Paradeep
Mumbai (15.0)
(12.0)
Vizag
Mumbai
(8.3)
(7.5)
Tatipaka
(0.1) New Refineries
Mangalore
(15.0)
Chennai
(10.5)
NOCL Cuddalore
Kochi (6.0)
(15.5)
Narimanam
(1.0)
Source: Industry Data, Equirus

Indigenous LPG supplies are received from 23 refineries and 11 gas fractionators. PSUs lead by a
dominant position in LPG production. India has 23 refineries with a total oil processing capacity of
~250mmtpa; these refineries have LPG production capacity of ~12.5mmtpa. OMCs are likely to set
up new refineries over the long term with LPG production capacity pegged at ~5% of total refining
capacity. We believe India would continue to rely on imports for ~50% of its LPG needs. The sourcing
will be primarily from Saudi Arabia, Qatar, other Middle Eastern countries, which supply 90% of India's
regular LPG imports, while 10% of the imports would be supplied by the US.
July 10, 2020| 15

Exhibit 40: Percentages of LPG supply sources
Refinery Pvt, 6%
Refinery PSU, 34%
Imports, 48%
India to continue relying on LPG

imports
Fractionators, 12%
Source: IOC, Equirus, *as of 2018
India’s LPG import terminal capacity currently stands at 16MMT and mainly concentrated on western
ports. With several other projects in progress on western and eastern coasts, the capacity is adequate
for meeting import requirements for the next ~10 years.
Exhibit 41: Total Indian LPG import terminal capacity stands at ~19MMTPA
Import terminals require efficient evacuation modes (road, pipelines, rail) to deliver LPG at low cost to
bottling plants and enhance throughput capacities. Indian companies have set up 3,375 kms of LPG
pipelines, with a total throughput capacity of 3.2MMT connecting ports and refineries to consumption
hubs.
July 10, 2020| 16

Exhibit 42: AEGIS’ throughput capacities supported by efficient evacuation facilities

Static Capacity Throughput Capacity Throughput/Static
AEGIS’ Terminal Evacuation
(MT) (MT) (turns)
Mumbai 20,000 1,100,000 55 Road, Pipeline
Haldia 25,000 2,500,000 100 Road, Pipeline
Pipavav 18,300 1,400,000 77 Road, Rail (3QFY21)
Kandla 45,000 4,000,000 89 Road, Rail, Pipeline
PSUs have also built a robust distribution network with 192 bottling plants between IOC, BPCL and
HPCL having a combined capacity of 18.8MMTPA. Total LPG distributers of PSU OMCs stand at
23,737, serving 276mn customers.
Exhibit 43: Bottling infrastructure concentrated towards North India
192 PSU bottling plants

192 bottling plants between IOC, IOC BPCL HPCL
BPCL and HPCL having a combined 91 plants 52 plants 49 plants
capacity of 18.8MMTPA
7.8MMTPA capacity 5.9MMTPA capacity 5.1MMTPA capacity
Plant location: North (33%), Plant location: North (35%),
South (26%), East (26%), West South (25%), West (25%), East
(10%), Central (4%) (10%), Central (6%)
Source: IOC, BPCL, HPCL, Equirus
July 10, 2020| 17

AEGIS – a key beneficiary of India’s LPG offtake

AEGIS is present in the entire gas supply chain – from gas sourcing, gas logistics to gas distribution
Strategic location and presence across business. The Indian economy is a net importer of almost all forms of energy; rising LPG imports would
value chain place AEGIS at a vantage require tremendous investment in gas infrastructure. AEGIS, with its strategically located infrastructure
point at key ports, is better placed to capitalise on rising LPG imports.
Exhibit 44: Services provided by AEGIS capture the entire value of gas logistics
Source: Company filings, Equirus
Exhibit 45: Gas segment forms 75% of overall EBITDA… Exhibit 46: .. within gas, logistics business has a lion’s share of EBITDA
Gas segment Liquid segment Sourcing EBITDA Terminalling EBITDA Distribution EBITDA
100%
90% 25% 25% 6%
80% 38% 34%
46%
57% 28%
70%
60%
50%
40% 75% 75%
30% 62% 66%
54%
20% 43% 66%
10%
0%
Sourcing growth outpaces Indian LPG imports

To improve sourcing capabilities, AEGIS entered a JV with Itochu Corporation in 2014 after offering a
40% stake in its Singapore subsidiary. Itochu Corporation is a leading Japanese trading firm
specializing in textiles, metals/minerals, food, machinery, energy/chemicals and ICT/general
products/real estate. It currently trades 5mn metric tons of LPG annually to markets in Japan, China,
South Korea, the Philippines, India, Indonesia, Thailand, as well as other Asian countries. This
collaboration enables AEGIS to procure LPG in global markets at competitive prices.
AEGIS earns about US$ 2/MT as commission for LPG sourced for its clients. Its clientele includes
India’s major oil refineries like BPCL, HPCL, IOC and Reliance; AEGIS has historically sourced 8-10%
of Indian LPG import requirements; the share went up to 13% in FY20 as it won two IOC tenders
(1.5mn MT for 2019). The IOC contract will not be recurring while AEGIS is bidding aggressively for
BPCL and HPCL tenders as it tries to increase business from them.
July 10, 2020| 18

Exhibit 47: AEGIS’ sourcing volumes outpaced Indian imports Exhibit 48: Sourcing EBITDA to grow in line with volumes
Sourcing Volumes ('000 MT) Aegis' market share (%) Sourcing EBITDA (Rs mn)
2,000 13% 14% 350
1,800 283 289
12% 300 272
1,600 10% 10% 10% 264
9% 9% 248
1,400 9% 10% 250
203
1,200 8% 200
1,000 6% 155
6% 140
800 150
600 4% 100
400
2% 50
200
518 1,040 1,177 1,232 1,861 1,350 1,650 1,815
0 0%
0
Gas logistics segment driving profitability

Gas terminal has been the fastest growing segment for AEGIS for the last 1-2 years led by an increase
in LPG handling volumes. Through this segment, the company provides terminalling services to Indian
OMCs importing LPG. The company earns throughput fees, handling & value addition service charges
for volumes handled at its terminals.
Rising LPG imports have led to demand for 3PL players like AEGIS for terminal and handling services.
AEGIS handled 3mn MT of LPG for The company has been able to grow its handling volumes at 36% CAGR over FY14-FY20. AEGIS
FY20, with a ~21% share of total handled ~3mn MT of LPG for FY20, with a ~21% share of total Indian LPG imports; it aims to take
Indian LPG imports this proportion to ~30%. This growth in handling volumes is being supported by continuous push to
increase handling capacities at existing locations and expanding into new locations (Kandla being the
latest one). Also, focus on finding new evacuation mechanisms (rail connectivity or pipeline
connectivity) helps increase throughput volumes in a terminal.
Exhibit 49: Gas handling volumes rising as AEGIS gains market Exhibit 50: …which is also driving profitability
share…
Gas handling volumes ('000 MT) Aegis' market share (%) Gas handling EBITDA (Rs mn) YoY%
6,000 35% 6,000 73% 80%
29%
28% 70%
5,000 30% 5,000
51% 60%
22% 25%
4,000 21% 4,000
19% 50%
20% 41%
38% 37%
3,000 15% 3,000 40%
3,363
12% 15% 27%
11% 30%
2,000 2,000
10% 15% 20%
1,000 5% 1,000
3% 10%
966 1,365 1,742 2,522 3,026 3,300 4,655 5,345 720 987 1,490 2,571 3,259 4,743 5,446
0 0% 0 0%
FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
July 10, 2020| 19

Terminals at key ports – key advantage

AEGIS’ current capacity at Mumbai, Pipavav and Haldia together constitutes about 5.0mn MT. With
planned additions, total capacity will be 9.4mn MT by 4QFY21. This leaves AEGIS with a lot of room
to grow for years to come.
Exhibit 51: LPG terminal capacities

LPG terminals Mumbai Pipavav Haldia
Static Capacity (MT) 20,000 18,300 25,000
Throughput capacity (MT) 1,100,000 1,400,000 2,500,000
Tanks 2 Cryogenic tanks Spheres 2 Cryogenic tanks
Anchor Customer NA NA HPCL
Other long-term
Reliance, BPCL, HPCL, IOC BPCL, HPCL, IOC IOC, BPCL
customers
• 24 carousel (Filling Points) bottling

• Connected to Uran-
plant
Chakan/Shikrapur pipeline • Railway Gantry (3QFY21)
Evacuation modes • Paradip -Durgapur Pipeline passes
• Pipeline feeding Reliance Industries • Lorry filling bays
through Haldia
• Lorry filling bays
• Lorry filling bays
Key terminals – highlights
Mumbai terminal: AEGIS has a static capacity of 20,000MT with two refrigerated storage tanks of 10,000MT each.
The terminal’s throughput capacity stands at ~1.1MMTPA. All 3 PSU OMCs bring in volumes at this terminal to be
fed to their respective bottling plants in Uran/Chakan. Road transportation was the only evacuation mode at the
terminal, but BPC along with HPC has recently commissioned 164km Uran-Chakan pipeline which is expected to
feed the bottling plants of BPC at Uran, HPC at Chakan and IOC at Chakan. The pipeline is expected to bring in
incremental volumes of about 0.3-0.5MMTPA at Mumbai from all three OMCs, which shall increase the throughput
at this terminal.
Pipavav Terminal: AEGIS's Pipavav LPG terminal currently has a static capacity of 18,300MT and throughput
capacity of ~1.4MMTPA. Due to growing demand at the terminal, AEGIS has invested in increasing the capacity
at the terminal over the years (0.25MMTPA in FY16 to 1.4MMTPA in FY18). It is further increasing the throughput
capacity by 0.2MMTPA by 4QFY21. AEGIS has undertaken construction of railway gantry project at its Pipavav LPG
terminal as a strategic move to increase throughput. The project is expected to be completed by 3QFY21. This
railway connectivity would help in securing a big increase in volumes in Pipavav for the future, because the cost of
transporting LPG by rail is significantly cheaper than road and that it would benefit its customers in terms of landed
cost of LPG at the bottling plants.
Haldia Terminal: Haldia terminal has a static capacity of 25,000MTPA, throughput capacity of 2.5MMTPA and was
commissioned in Sep’17 at a cost of Rs 2.5bn with HPCL serving as an anchor customer at the terminal. This is the
only terminal where AEGIS has an anchor customer, which also led to a quicker ramp up of the facility in our view.
Since its inception, Haldia has seen good pick up in volumes yoy as demand for LPG at HPCL’s eastern zone has
risen. HPC recently commissioned one of the largest bottling plants in Asia at Panagarh and Haldia terminal will
feed LPG to this plant. The plant has a capacity to consume 0.5 MMTPA and Paradip – Haldia- Durgapur pipeline
would help in evacuation at the terminal.
Kandla Terminal: Currently this terminal is under construction and is set to be operational by 4QFY21. The terminal
will have two refrigerated tanks of 22,500MT of static capacity each and provide 4MMTPA throughput at full utilisation.
The project will be the 4th LPG Terminal in the Group’s portfolio as well as being the largest. This terminal will mainly
cater to LPG volumes to be distributed to bottling plants in North of India. The company is set to incur a capex of Rs
3.5bn with a mix of debt and internal accruals. As per Management’s current assessment and talks with customers, at
least 1MMT of volumes is expected at Kandla in its first year of operations. Besides, the Jamnagar-Loni pipeline will
help AEGIS with the LPG evacuation thereby driving the throughput. Also, the three PSU OMCs in collaboration are
setting up the biggest LPG pipeline, Kandla-Gorakhpur pipeline that will feed the bottling plants in Gujarat, MP and
UP. Once this project is ready, the volumes at Kandla terminal is set to get boosted.
July 10, 2020| 20

Exhibit 52: Current LPG terminal capacity Exhibit 53: Expansion pipeline
Static Capacity (MT) Throughput Capacity (MT) Static Capacity (MT) Throughput Capacity (MT) Expected time Cost (Rs mn)
Mumbai 20,000 1,100,000

Pipavav 3,800 200,000 4QFY21 750
Pipavav 18,300 1,400,000
Haldia 25,000 2,500,000
Kandla 45,000 4,000,000 4QFY21 3,500
Total 63,300 5,000,000
LPG pipelines at key terminals to support throughput growth

Evacuation of LPG through rail, road or pipeline and the company’s focus towards investing in these
evacuation solutions will drive growth over the next few years.
AEGIS is set to commission railway gantry project at its Pipavav LPG terminal in 3QFY21; the project
will facilitate LPG evacuation through rail wagons, potentially driving throughput volumes at Pipavav.
Also, with the commissioning of Uran-Chakan pipeline, the company will be able to push through
more LPG from the Mumbai terminal.
We discuss some of the existing and under-construction pipeline which may further boost throughput
volumes for AEGIS terminals.
• Paradip-Haldia-Durgapur pipeline (IOCL, 679kms | 1.3MMT capacity | 39.8% utilisation)

IOC constructed this pipeline to serve India’s eastern part. This pipeline transports LPG from
Paradip, Haldia refinery and Indian Oil Petronas, Haldia, to the LPG bottling plants at Balasore,
Budge Budge, Kalyani, and Durgapur. HPCL commissioned one of the largest bottling plants in
Asia at Panagarh, and the Haldia terminal will feed LPG to this plant. The plant has a capacity
to consume 0.5mn MTPA and LPG is being pushed through this pipeline.
• Jamnagar-Loni pipeline (GAIL, 1,414kms | 2.5MMT capacity | 50.5% utilisation)
Commissioned in 2000 by GAIL, the pipeline traverses five states – Gujarat, Rajasthan, Haryana,
Delhi and Uttar Pradesh. This pipeline transports LPG for IOC, BPCL, HPCL, with the source of
LPG being the Reliance and Essar refineries in Jamnagar and IOC’s import terminal at Kandla.
GAIL is set to expand capacity of this pipeline to 3.25MMT PA by the time AEGIS’ Kandla terminal
becomes operational. Subject to commercial terms with GAIL, this pipeline would help AEGIS in
getting major throughput volumes at the Kandla terminal to be commissioned in 4QFY21.
• Kandla-Gorakhpur pipeline (IOCL/BPCL/HPCL, 2,757kms | 3.75MMT capacity | Upcoming)
IOC, HPCL, and BPCL are together setting up India’s biggest LPG pipeline connecting the
western coast to Gujarat, Madhya Pradesh and Uttar Pradesh. The pipeline will source LPG
from three import terminals on the west coast and two refineries (at Koyali and Bina) and supply
it to 22 bottling plants of the three OMCs connected. Once AEGIS’ Kandla terminal is ready,
it will be able to push LPG through this pipeline thereby securing long term contracts from
OMCs.
• Uran-Chakan/Shikrapur (164kms | 1MMT capacity | Recently Commissioned)
This pipeline got commissioned in June’20 and shall reduce LPG movement by road from Mumbai
to Pune. AEGIS is set to benefit the most out of this pipeline as it can potentially increase throughput
volumes at the Mumbai terminal once HPCL starts to push LPG through the pipeline.
Other pipelines
There are several regions where AEGIS is not present currently. Some of these pipelines are already
being served by other terminal operators and would be hard for AEGIS to penetrate these. Regions
like Kerala and Vizag are a tough ground as Vizag-Secunderabad pipeline is already being served by
the terminals of HPCL and East India Petroleum while IOC is establishing a LPG terminal at Kochi.
Mangalore pipelines are also being served by HPCL & Total but the upcoming extension i.e Hassan-
Cherlapally pipeline has the potential to increase LPG throughput demand at Mangalore.
• Vizag-Secunderabad pipeline (GAIL, 618kms | 1.3MMT capacity | 42.2% utilisation)
Set up by GAIL, the pipeline supplies LPG from the import terminal of HPCL and East India
Petroleum to five districts in AP while terminating at Secunderabad.
July 10, 2020| 21

• Mangalore-Hassan-Mysore-Solur pipeline (HPCL, 356kms | 1.9MMT capacity | 23.4%

utilisation)
Commissioned by HPCL in 2016, the pipeline connects the refinery in Mangalore to Bangalore
passing through four districts.
• Panipat-Jalandhar pipeline (IOCL, 280kms | 0.7MMT capacity | 39.5% utilisation)
Constructed by IOC in 2008, the pipeline evacuates LPG from IOC's Panipat refinery and
transports it to its LPG bottling plants at Nabha and Jalandhar in Punjab, while also serving
plants in Una and Baddi in Himachal Pradesh and Jammu and Leh in J&K.
• Ennore-Trichy-Madurai pipeline (IOCL, 615kms | 0.9MMT capacity | Upcoming)
The pipeline being set up by IOC will connect import terminals in Chennai to serve the bottling
plants across the state of Tamil Nadu thereby reducing the dependence on road transportation
of LPG.
• Hassan-Cherlapally pipeline (HPCL, 680kms | Upcoming)
HPCL to expand its LPG pipeline from Hassan in Karnataka to Cherlapally in Telangana. This
pipeline would provide LPG access to bottling plants in Hyderabad while passing to several
districts in Karnataka, Telangana and Andhra Pradesh.
Exhibit 54: Indian LPG pipeline landscape: 3,375 kms with total throughput capacity of 3.2MMT connecting ports and refineries to consumption hubs
July 10, 2020| 22

Capacity expansion ready to serve rising import needs

AEGIS has been proactive in adding capacity and strengthening its position at major ports. India currently
has 16 terminals with ~19MMTPA capacity and further expansion plans of ~13 MMTPA under several
stages of construction (AEGIS is coming up with 4MMTPA capacity at Kandla). AEGIS operates about
~26% of total India’s LPG import capacity which gives it an edge over peers. The next big players are
PSU companies which either operate terminals on their own or via JVs with private players. AEGIS also
plans to set up one more capacity in the South where it does not have any terminals yet.
Exhibit 55: Competitive landscape - Capacity expansion underway to meet rising Indian LPG imports
Import terminal Throughput Capacity (MMTPA) Expansion (MMTPA)
IOC, Kandla 1.2 1.3
AEGIS, Kandla - 4 by FY21
Adani, Mundra 3.6 -
GCPTCL, Dahej 0.2 1.5 by FY25
AEGIS, Pipavav 1.4 1.6 by FY21
SHV Porbandar 0.4 NA
AEGIS, Mumbai 1.1 NA
BPCL, JNPT 0.8 NA
HPCL, Mangalore 1.8 NA
Total, Mangalore 0.6 NA
IOC, Kochi - 1.5 under construction
IPPL, Ennore 0.6 2.3 (+ 1.7 proposed)
SHV Tuticorin 0.4 1.2 (+ 0.8 proposed)
SALPG, Vizag 1.8 NA
EIP, Vizag 0.5 NA
IOC, Paradeep - 0.6 under construction
IIPL, Haldia 2 NA
AEGIS, Haldia 2.5 NA
BPCL, Haldia - 1 under construction
Adani, Damra - 2.2 proposed
TOTAL ~19 ~32*
Source: Equirus, Secondary research, *Excludes projects under proposals
Exhibit 56: Capacity in place for the next leg of growth Exhibit 57: Gas segment capex intensified in the last few years
Throughput capacity ('000 MT) Capacity utilisation (%) Gas segment capex (Rs mn)
12,000 129% 140% 2,500
10,000 105% 120%

2,000
100%
8,000
1,500
80%
6,000 61%
55%
49% 50% 48% 60% 1,000
4,000 35%
40%
2,125.3
2,145.8
500
120.2
150.5
196.9
223.5
216.4
504.4
348.9
1500
2250
16.6
94.4
807
820
2,000 20%
750 1,300 3,550 5,000 5,000 9,425 9,700 9,700 0
FY21E
FY22E
FY23E
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
0 0%
July 10, 2020| 23

Gas distribution in industrial/commercial, auto LPG gaining traction

AEGIS also has a presence in the distribution business where it serves industrial clients with bulk LPG
sales, provides packaged cylinders for commercial/retail purposes and operates auto-gas stations
through 115 stations across seven states; the company targets to reach 200 stations in next five years.
AEGIS distributes commercial LPG under the brand Puregas via 164 commercial distributors across
55 cities in nine states. The company offers cylinders in 17kg, 21Kg, 33Kg VOT/LOT variants for
commercial customers.
Distributes commercial LPG under the AEGIS also sells bulk LPG to autos, steel, and ceramics. It provides LPG installation on Build-Own-
brand Puregas via 164 commercial Operate-Maintain (BOOM) basis, thus providing end-to-end fuel management to industrial clients.
distributors and distributes Autogas via
115 gas stations. The company has also forayed into the domestic segment with products Puregas Chhota Cikander
(2Kg/4Kg) with cook top and 12Kg Puregas cylinders.
With strong cash generation likely ahead, AEGIS aims to ramp up investment to expand its distribution
network, and open bottling plants to scale up its distribution business.
Exhibit 58: AEGIS Puregas for commercial clients Exhibit 59: AEGIS Puregas for domestic segment
Exhibit 60: AEGIS’ industrial & commercial sales have picked up Exhibit 61: Helped by increasing distributors/stations
Industrial & Commercial volumes ('000 MT) Autogas stations Industrial & Commercial distributors
200 Autogas volumes ('000 MT) 250
180.0
180
200
160 200 188
143.6 176
136.5 164
140
120 150 135 130
101.3 109 120 125
100 88.5 104 108 113 115
106
97
80 100 81
53.7
60
28.6 36.1 33.8
40 23.2 24.2 26.1 28.0 28.9 50
21.7 22.8
20
0 0
July 10, 2020| 24

Exhibit 62: IOC has the largest autogas station network Exhibit 63: Total PSU autogas stations have remained stable
IOC HPCL BPCL Aegis Total PSU Autogas stations

676 675 672 661 657
400 700
352
600
300
500
212 400
200
300
115
90 200
100
100
0 0
Latest FY16 FY17 FY18 FY19 FY20
Exhibit 64: Gas segment to be the main driver of profitability
Gas segment EBITDA (Rs mn) yoy %

8,000 70%
59%
56%
7,000 60%
6,000 50%
39%
36% 36%
5,000 40%
4,000 24% 30%

16%
3,000 20%
2,000 10%
-1%
1,000 0%
1,183 1,466 1,991 3,106 4,230 4,208 5,853 6,788
0 -10%
July 10, 2020| 25

Liquid division – end of capex cycle to ensure returns pick up

AEGIS Group owns and operates a network of shore-based tank farm installations for the receipt and
handling of bulk liquids. The company has liquid terminals in Mumbai, Kochi, Pipavav, Kandla,
Mangalore and Haldia, which are connected by pipelines to various berths for handling exports and
imports of hazardous chemicals, petroleum products, and petrochemicals. Clients include top tier firms
such as BPCL, HPCL, Reliance Industries, Caltex, Supreme Industries, as well as leading chemical firms
such as Jubilant Lifesciences, Bombay Dyeing, and Laxmi Organics. Facilities are offered on a long-
term contract or spot contract basis, and other services such as customs bonding, inventory
management, just-in-time delivery, and on-site product quality testing are also provided.
Exhibit 65: Services provided by AEGIS capture the entire value of liquid logistics
Source: Company filings, Equirus
Storage capacities at key ports lend strategic advantage

AEGIS is one of India’s leading providers of third-party bulk liquid storage with a total handling capacity
of 689mn litres across 6 major ports. It also has an expansion pipeline of 82mn litres of capacity
expected to be commissioned by 4QFY21. AEGIS’ legacy terminals at Mumbai, Kochi and Haldia
have all matured with regular business from established clients running at capacity utilisation of 80-
120%. However, impediments to capacity expansion, particularly at Mumbai (due to land
unavailability), have led AEGIS to explore other locations for capacity expansion. We expect segment
growth to pick up once new capacities begin to mature and start handling high-value liquids.
Exhibit 66: Current capacity Exhibit 67: Expansion pipeline

Capacity (‘000 KL) Capacity (‘000 KL) Expected time Cost (Rs mn)
Mumbai 273
Kochi 20 4QFY21 150
Pipavav 120
Haldia 120
Kandla 140 Haldia 12 4QFY21 100
Kochi 51
Mangalore 25 Mangalore 50 4QFY21 350
Total 729
Source: Equirus, Company Filings Source: Equirus, Company Filings
July 10, 2020| 26

Exhibit 68: Share of POL (Petroleum) handled at major Indian ports*
Others, 5% Haldia, 4%
Paradip, 16%
Kandla, 27%
Vishakapatnam, 8%
Chennai, 6%
Mumbai, 16% Kochi, 10%

New Mangalore,
10%
Source: Equirus, IPCA Data, *Does not include POL handled at private ports, FY20 data
Ports at Mumbai, Mangalore, Kochi, Kandla, and Haldia, wherein AEGIS has liquid terminals,
collectively handle ~66% of India’s total POL traffic; this gives the company a sharp competitive edge
in serving petroleum imports at these major terminals.
Exhibit 69: AEGIS’ liquid terminal capacities

Mumbai
Pipavav Haldia Kochi Mangalore Kandla
Sealord AEGIS
Storage
75,000 1,98,000 120,000 120,000 51,000 25,000 140,000
capacity (KL)
37 tanks which
10 tanks which 20 tanks which
include MS, SS, 21 MS tanks, 2 SS
Specifications include MS and 29 MS tanks include MS and IFR 5 Tanks 23 Tanks
epoxy coated, IFR tanks
IFR tanks tanks
tanks
Import, export, Import, export, Import, export, Import, export,
Import, export, Import, export,
Services offered storage, and storage, and Import, export storage, and storage, and
storage storage
logistics services logistics services logistics services logistics services
Class A, B, and C
Class A, B, and C Class A, B, and C Class A, B, and C
Products Class A, B, and C chemicals, POL Class A, B, and C Chemicals and
products, products, products,
handled products products and products. petrochemicals
Chemicals Chemicals Chemicals
vegetable oils.
Oil companies,
major consumers,
HPFR, BPFR, HPCL and chemical Consumer centres Consumer centres
Customer Chemical traders Caters to Eastern Chemical traders
Wadala Depot, and traders including from South and from Gujarat &
profile and oil companies markets and Oil companies
IOC sewree depot BPCL, HPCL, Coastal Karnataka Rajasthan
Reliance, and
Bombay Dyeing.
10 tank lorry filling 26 tank lorry filling 22 tank truck 13 tank truck 10 tank lorry filling Lorry filling bay -
bays bays. loading/unloading loading/unloading bays 4x12” jetty pipelines
4x12” jetty pipelines 4x12” jetty pipelines bays bays 2x12” and 1x10”
including one SS including one SS Connected to Jetty jetty pipelines
pipeline pipeline Jetty pipelines 2 X via 2X 12”
Connected to 5 Connected to 5 16’’ and 2x12” Diameter MS
berths berths including one SS Pipeline and 1 X
Evacuation Connected to Connected to HPCL pipeline 12” Diameter SS
HPFR, BPFR, HPCL and BPCL refineries Pipeline
Wadala Depot, and as well as oil
High vessel
IOC sewree depot installations in
discharge and
via a network of Sewree and Wadala
loading rates due to
pipelines via a network of
high capacity
pipelines.
pumps.
July 10, 2020| 27

Changing product mix at new facilities to drive liquid segment growth

The liquid segment’s revenue grew at a meagre 8% CAGR over FY14-FY20 in contrast to high growth
in the gas terminal segment; the slow revenue uptick mainly stemmed from full utilisation at Mumbai,
New capacities to contribute to EBITDA Kochi, and Haldia terminals. Overall EBITDA has also been flat as new terminals have been slow in
growth by FY22 adding to revenues and profitability. This is particularly true for the Pipavav terminal which is operating
at ~30% utilisation as the port is relatively new and utilisation pick up will be gradual. Normally at
Mangalore, Kochi, and Haldia, it usually takes 3-4 years to bring in high-value liquid cargos which
drive EBITDA; hence, by FY22, new capacity additions should contribute to EBITDA growth. Note that
the Kandla terminal, one of the busiest ports for liquids, is already seeing product mix changes.
Exhibit 70: AEGIS’ liquid volumes (‘000 KL) Exhibit 71: EBITDA to grow at CAGR of 7% over FY20-23E
Mumbai Kochi Haldia Pipavav Kandla Mangalore Liquid segment EBITDA (Rs mn) yoy %
300 1,800 40%
33%
1,600
250 30%
1,400
200 1,200 16% 20%
11%
1,000
6% 5% 10%
150 3%
800 1%
100 600 0%
400 -13%
50 -10%
200
1,024 889 1,029 1,035 1,377 1,459 1,622 1,708
0 -20%
0
Return ratios to improve in next few years

Due to expansion constraints at Mumbai, AEGIS has invested in new terminals at Mangalore and
As new facilities mature and handle
Kandla to strengthen its presence on the western coast. This has led to a sharp increase in capex over
high-value liquids, we expect profits
the last few years. Normally, it takes about 3-4 years after commissioning of new capacities to bring
and thereby return ratios to improve
in optimum business. Kandla, being the busiest port for liquids, saw its new terminal of 100mn litres
take off with good volumes and is already seeing high-value liquids. About 40mn litre of capacity
expansion at Kandla was completed in 2HFY20 and will add to incremental revenues. Similarly, as the
new facilities at Mangalore and Haldia mature, profitability will improve with handling of high value
liquids; this in turn will improve return ratios.
Exhibit 72: Higher capex from FY17… Exhibit 73: …has led to steep fall in segment ROCE
Liquid segment Capex (Rs mn) Liquid Segment ROCE(%) Adj Liquid Segment ROCE (%)
1600
25%
1400 1337 1336
21%
20% 20% 21% 20%
1200 20% 18% 19%
17%
1000 15% 14%
790 14%
15%
800 11%
572
600 477 10%
11%
400 310 268 291 302 10%
247
5% 8%
200 110
0 0%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Equirus, Company Data Source: Equirus, Company Data* adjusting for revaluation of Mumbai land
ROCE would have been better
July 10, 2020| 28

Competitors are also customers!

AEGIS faces competition from OMCs, port operators, energy companies and other 3PL players in the
oil & gas space. While AEGIS has been quick in recognising the demand scenario by swiftly adding
capacities at key ports, it faces competition from OMCs who have also set up terminals to meet their
LPG import needs. However, long-term relationships with OMCs will benefit AEGIS as the former are
likely to outsource terminalling to 3PL players to concentrate on other key infrastructure facilities like
pipelines & bottling plants. Several port companies are also entering the LPG terminal space as a
strategic move to increase port volumes. Adani recently commenced operations of its LPG terminal at
Mundra port.
Exhibit 74: AEGIS is the largest player in the LPG handling space – to benefit from long term relationship with OMCs
Source: Industry Data, Equirus, Capacity in MMTPA
AEGIS is the second largest liquid operator with a presence at six ports. Indian Molasses Company
(IMC) leads in this space with a presence at 14 ports and a capacity of 1.1m kl. Most other third-party
liquid terminal operators are limited to regional ports with smaller capacities. We believe the liquid
storage & handling space is relatively large with enough room for growth; also, there is no threat to
the market share of AEGIS due to its longstanding relationships with OMCs and chemical companies.
Exhibit 75: Top competitors in liquid terminals

Company Total Capacity (‘000 KL) Port Presence
IMC 1,124 14
AEGIS 689 6
GCPTCL 480 1
IOT 321 2
Vopak 253 1
Ganesh Benzoplast 196 3
Kesar Terminal 127 1
Source: Equirus, Company Data
July 10, 2020| 29

Initiate with LONG, Dec’21 TP of Rs 310

Gas segment to drive 17% EBITDA (adjusted) CAGR over FY20-FY23E
Given India’s rising LPG consumption and imports (~50% of total consumption imported), 3PL terminal
operators like AEGIS are set to benefit for the years to come. AEGIS has seen dramatic revenue growth
over last few years as its gas segment investments have yielded positive results. It currently operates ~40%
of India’s total LPG terminal capacity and will continue to see steady growth given its long-term contracts
with PSU OMCs.
We expect AEGIS’ gas segment EBITDA to grow at a 17% CAGR over FY20-FY23E as the company’s
Gas segment’s EBITDA growth to be terminals see increased throughput over the next 1-2 years given the following:
driven by increased throughput across
• AEGIS’ Kandla terminal is set to operate from 4QFY21 and add 1MMT over the first year of
terminals
operation.
• Jamnagar-Loni pipeline and the planned Kandla-Gorakhpur pipeline will help in securing long-
term contracts for Kandla and Pipavav terminals.
• Commissioning of rail gantry at Pipavav by 3QFY21 will increase throughput at that terminal.
• Mumbai terminal is also likely to see higher throughput led by commissioning of Uran-Chakan
pipeline
• The new LPG bottling plant at Panagarh in West Bengal will drive throughputs from the Haldia
terminal.
Exhibit 76: Gas segment to drive EBITDA growth… Exhibit 77: … led by handling segment profitability uptick
Gas segment EBITDA Liquid segment EBITDA Sourcing EBITDA (Rs mn) Distribution EBITDA (Rs mn)
100% Handling EBITDA (Rs mn)

90% 25% 25% 22% 20% 6000
26%
80% 38% 34%
46% 5000
70%
60% 4000
50%
3000
40% 75% 75% 78% 80%
74%
30% 62% 66% 2000
54%
20%
1000
10%
0% 0
Liquid terminal will also mature in a few years as new capacities will take 3-4years to generate optimum
yields. Barring the Pipavav terminal, other terminals are already seeing good volumes. We expect
liquid segment EBITDA to grow at a 7% CAGR over FY20-FY23E.
Exhibit 78: Expect 17% gas segment EBITDA CAGR over FY20-FY23E Exhibit 79: Liquid segment EBITDA growth to be driven by new capacity
Gas segment EBITDA (Rs mn) yoy % Liquid segment EBITDA (Rs mn) yoy %
8,000 70% 1,800 33% 40%
59%
56% 1,600
7,000 60%
30%
6,000 50% 1,400
39% 16%
36% 36% 1,200 20%
5,000 40% 11%
1,000
4,000 24% 30% 6% 5% 10%
800 3%
16% 1%
3,000 20%
600 0%
2,000 10% 400
-1% -13%
-10%
1,000 0% 200
1,183 1,466 1,991 3,106 4,230 4,208 5,853 6,788 1,024 889 1,029 1,035 1,377 1,459 1,622 1,708
0 -10% 0 -20%
July 10, 2020| 30

We expect significant growth in EBITDA and net profit led by the LPG handling division. We expect
EBITDA to improve from increase in gas volumes, new terminals commencing operations and
improving yield on new liquid terminals. Gas segment has been driving EBITDA for the last couple of
years and the segment’s EBITDA share has increased from 43% in FY15 to 75% in FY20. We expect
this trend to continue and forecast an ~16%/~18% EBITDA/PAT CAGR over FY20-FY23E.
Exhibit 80: Expect 16% EBITDA (adjusted) CAGR over FY20-FY23E Exhibit 81: Expect 18% PAT (adjusted) CAGR over FY20-FY23E
Total EBITDA (Rs mn) yoy % Total PAT (Rs mn) yoy %
66%
9,000 45% 6,000 70%
39% 39%
8,000 40% 56%
53% 60%
5,000
7,000 32% 35%
31% 50%
29% 41%
6,000 30% 4,000
40%
5,000 25%
3,000 21% 30%
4,000 20%
14% 12% 20%
3,000 10% 15% 2,000
5% 10%
2,000 10%
4% 1,000 -3%
1,000 5% 0%
1,853 2,036 2,660 3,709 5,153 5,349 7,066 8,029 1,133 1,192 1,978 2,214 3,384 3,288 4,628 5,586
0 0% - -10%
Source: Equirus, Company Data, EBITDA is adjusted for ESOP expense Source: Equirus, Company Data, PAT is adjusted for ESOP expense
FCF of Rs 9.6bn over FY21-FY23E led by solid cash conversion

We believe AEGIS has an efficient business model with high operating cash flow conversion from
EBITDA. A high portion of capex took place in FY17-FY19 for the construction of the Haldia LPG
terminal and capacity/evacuation extension at Mumbai and Pipavav terminals. AEGIS also undertook
capex to build liquid terminals at Kandla and Mangalore and expand liquid capacity. With this capex,
AEGIS has become a leading player in oil & gas logistics.
AEGIS is focusing on creating this infrastructure at strategic locations, which would have a good water
With healthy operating profits and cash draft capable of handling a VLGC and have rail and pipeline connectivity. A capacity of 9.4 MMTPA
flows, and minimum working capital post the Kandla LPG terminal construction would enable the company to capture a higher market share
requirements, cash conversion will be of LPG import handling. Given healthy operating profits and cash flows, we expect most of the capex
strong to be funded by internal accruals.
WC requirements are also miniscule as the company offers 30-day credit period and keeps minimal
inventory.
Exhibit 82: Efficient working capital management leads to… Exhibit 83: …high cash conversion and solid operating cash flows
Operating cash flow
Receivable days Payable days
Cash conversion % (CFO/EBITDA(1-t) (RHS))
Cash conversion cycle 7,000 180% 200%
180%
70 6,000
160%
60
5,000 140%
50 111%
4,000 120%
40 90% 95% 94%
89%
30 100%
76%
3,000 80%
20
10 2,000 60%
34%
0 40%
1,000
-10 20%
1384 1770 1915 5563 1463 4053 5041 6051
-20 0 0%
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
July 10, 2020| 31

Exhibit 84: With minimal capex requirements in the future… Exhibit 85: …AEGIS to see FCF of Rs 9.6bn over FY21-23E
Capex (Rs mn) Free cash flow (Rs mn)

3,500 6,000
4,914
3,000 5,000
4,022 3,848
4,000
2,500
3,000
2,000
2,000
1,500 830
1,000 468
1,000
0
500 -1,000 -460 -313
916 2,229 2,991 1,541 1,726 3,208 1,207 1,220 -1,077
0 -2,000
Capacity expansion have largely been funded by internal accruals

AEGIS has generated close to Rs 10bn of cash from operations over FY16-FY19, constituting ~67%
of total funds generated over that period. Most of the cash generation (~48%) has been deployed
towards capacity expansion. Only equity raise that AEGIS has done over the last 5 years was in FY18
at a subsidiary level of Hindustan AEGIS LPG. Itochu bought a 19.7% stake in that subsidiary, which
mainly operates LPG terminal at Haldia, for a total sum of Rs 2.5bn. With this stake sale, AEGIS was
able to recover the terminal’s entire construction cost.
Exhibit 86: CFO remains primary source of funds… Exhibit 87: Funds have been deployed towards capacity expansion,
debt repayment
Sources of funds Utilisation of funds

1% 1%
0% CFO Net capex
15% Equity raised 21% Debt repayment
Debt raised Interest paid

1%
48%
15% Dividend paid
Dividend received 9%
67% Interest received 6% Purchase of Investment
Sale of investment 15% Increase in Cash &

Equivalents
Source: Equirus, Company Data,*Equity raise was mainly at subsidiary level,

there has been no dilution as company level Source: Equirus, Company Data
July 10, 2020| 32

Return ratios to improve on better utilisation

Exhibit 88: The company has turned net cash positive Exhibit 89: Return ratios remain attractive
Net debt / EBITDA ROE ROIC

150% 25%
22% 22% 22%
0.95
100% 19% 19%
20% 18%
0.49 0.53 17% 21%
20% 20%
50% 0.31 15%
15% 18%
17% 16% 16%
-0.11 -0.13
0%
14%
-0.50 -0.52 10%
-50%
-0.98
5%
-100%
-150% 0%
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Grants ESOPs of Rs 3.5bn to senior employees

• To reward the senior staff and motivate in executing strategies for the next five years, AEGIS will
grant ~17mn ESOPs with non-cash expenses of Rs 3,488mn spread out over three years.
• The company has granted ~5.66m shares under ESOP for FY20, taking a noncash expense of
Rs 2,338mn during FY20.
• The same number of shares (5.66m) will be issued in FY21 and FY22 each, resulting in total
shares issued under ESOP to ~17m.
• The company will charge Rs 930mn/Rs 170mn to the P&L statement in FY21/FY22, and will lead
to a total dilution in equity by 5% in FY22.
• ESOPs are only for a few senior employees and promoters are not participating.
July 10, 2020| 33

COVID impact – largely limited to distribution business

As per management, Covid-related impact on the business will be minimal. AEGIS was profitable every
month despite the lockdown.
• In the LPG logistics business, 1QFY21 throughput volumes should only see a slight decline
over 4QFY20 (728k MT). There were several spot tenders by PSUs in April, and LPG
inventories are currently high in the country. As lockdown restrictions have eased and refinery
capacities have restarted, LPG imports are expected to be muted in the near term.
• LPG distribution business was badly affected in April and May due to lockdown as taxis, auto
rickshaws, hotels and restaurants were completely closed. However, June has seen a sharp
recovery as some states have opened up. Hotels & restaurant volumes have also seen an
uptick in June and as per management, volumes would only recover to normal levels in
2HFY21 provided the COVID situation improves.
• Liquid terminal division has remained reasonably good during the lockdown, because of
storage fee-based revenue model. However, an economic slowdown due to the pandemic
has pulled down demand for petroleum, petrochemical and chemical products; this could
impact revenues of the liquid segment in FY21. Management does not expect significant
growth this year in liquid revenues due to the slowdown in petroleum and chemical trade.
• Impact of lockdown on ongoing projects have been less significant and management expects
the projects to complete largely in line with earlier guidance.
o Pipavav rail gantry project was stalled for 6 weeks because of the lockdown from
March-end and is delayed by 3 months. It will be commissioned in 3QFY21.
o Commissioning of the Kandla LPG terminal is delayed by two months to 4QFY21

due to the lockdown. The project work restarted from Apr’20 and is operating with
250 labourers (vs. 400 pre-COVID).
o Mangalore liquid terminal expansion is on track and expected to be completed by

FY21-end.
o The Haldia liquid terminal expansion is expected to complete by 4QFY21.
July 10, 2020| 34

Valuation
AEGIS’ earnings rose with the commencement of LPG terminals and the stock price has moved up
historically on new terminal visibility. We believe the market is not fully pricing in the potential increase in
volumes from existing terminals and new Kandla terminal that is set to commence operations in 4QFY21.
Given strong cash flow generation, we have valued AEGIS using DCF methodology as shown in exhibits
below. We arrive at Dec’21 TP of Rs 310. Our TP implies a PE multiple of 24x/20x on our
FY22E/FY23E EPS estimates. Since our target price implies 72% upside to the current market price, we
initiate our coverage with a LONG rating.
Exhibit 90: Free cash flow projections
Rs mn 2020A 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
EBIT 4,466 4,537 6,146 7,070 7,417 7,795 8,193 8,613 9,057 9,525 10,018
D&A 687 812 920 959 1,013 1,058 1,102 1,147 1,191 1,235 1,280
Taxes -736 -907 -1,229 -1,414 -1,854 -1,949 -2,048 -2,153 -2,264 -2,381 -2,505
Capex -1,726 -3,208 -1,207 -1,220 -1,000 -1,000 -1,000 -1,000 -1,000 -1,000 -1,000
Change in NWC -3,003 -403 -782 -481 -103 -108 -113 -119 -125 -131 -138
FCFF -313 830 3,848 4,914 5,474 5,796 6,133 6,487 6,859 7,248 7,656
Exhibit 91: DCF assumptions Exhibit 92: DCF output

DCF assumptions DCF output Rs mn
Post tax cost of debt 7.0% NPV (FY22E-30E) 26,953
Risk free rate 6.0% TV 65,712
Beta 1.01 EV 92,664
Risk premium 9.5% Net debt -675
Cost of Equity 15.6% MV 93,339
Debt (%) 12.0% No of Shares 340
Value per share 275

Equity (%) 88.0%
Target Price (Rs per share as on Dec’21) 310
WACC 14.6%
Current Price (Rs per share) 180
Terminal growth rate (%) 3.0%
Upside (%) 72%
Source: Company Data, Bloomberg, Equirus Source: Company Data, Bloomberg, Equirus
July 10, 2020| 35

0
10
20
30
40
50
60
70
Jun-15
0
1,000
1,500
2,000
2,500
500
01-08-2010 Sep-15
01-03-2011 Dec-15
01-10-2011 Mar-16
01-05-2012 Jun-16
Aegis Logistics (AGIS IN)
01-12-2012 Sep-16
Historical P/E
Dec-16
Aegis
01-07-2013
Exhibit 93: PE – price band
Mar-17

01-02-2014
01-09-2014 Jun-17
01-04-2015 Sep-17
+1SD
01-11-2015 Dec-17
Mar-18
Exhibit 95: AEGIS vs Nifty small-cap 100

01-06-2016
01-01-2017 Jun-18
01-08-2017 Sep-18
Dec-18
-1SD
01-03-2018
01-10-2018 Mar-19
Nifty Smallcap 100 (RHS)

01-05-2019 Jun-19
01-12-2019 Sep-19
01-07-2020 Dec-19
Mean
0
Mar-20
50
100
150
200
250
300
Jun-20
0
5
10
15
20
25
30
35
40
45
Jun-15
0
1,000
1,500
2,000
2,500
500
01-08-2010 Sep-15
01-03-2011 Dec-15
01-10-2011 Mar-16
01-05-2012 Jun-16
01-12-2012 Sep-16
01-07-2013 Dec-16
Aegis
Mar-17

01-02-2014
Historical EV/EBITDA
01-09-2014 Jun-17
01-04-2015 Sep-17
Exhibit 94: EV-EBITDA – price band
Dec-17
Exhibit 96: AEGIS vs Nifty Midcap100
01-11-2015
Mar-18
+1SD
01-06-2016
01-01-2017 Jun-18
01-08-2017 Sep-18
01-03-2018 Dec-18
-1SD
01-10-2018 Mar-19
Nifty Midcap 100 (RHS)
01-05-2019 Jun-19
01-12-2019 Sep-19
01-07-2020 Dec-19
Mean
Mar-20
50
100
150
200
250
300
Jun-20
India Equity Research | Initiating Coverage
July 10, 2020| 36

Comparison with global companies

AEGIS is trading at a significant premium to global oil and gas storage/transport service providers. We
believe this is justified given its potential growth visibility, superior returns and earnings CAGR. With
India among the world’s top 3 consumer of LPG, import requirements are expected to keep AEGIS’
earnings growth strong; also, limited number of terminal operators should help record higher EBITDA
and EPS growth compared to global terminal operators.
Exhibit 97: Global comparison

Mkt CY19 Revenue CAGR EBITDA CAGR PAT CAGR
CMP Cap Revenue
Company Country Business summary
USD USD. (mn CY19-CY21 CY19-CY21 CY19-CY21
Mn. USD)
AEGIS distributes LPG and provides logistics and terminalling

AEGIS services in the oil, gas and chemicals sectors. The company
2 811 1,014 IN 3% 24% 51%
Logistics* also manufactures and distributes oleochemicals and
kerosene oil and provides chemical storage facilities
Kinder Morgan, Inc. of Delaware operates as a pipeline
transportation and energy storage company. The Company
Kinder owns and operates pipelines that transport natural gas,
14 31,457 13,209 US -2% -1% -2%
Morgan gasoline, crude oil, carbon dioxide, and other products, as
well as terminals that store petroleum products and chemicals
and handle bulk materials like coal and petroleum coke.
Energy Transfer LP owns and operates a portfolio of energy
assets. The Company engages in the natural gas midstream,
Energy
6 17,082 54,213 US liquid transportation, and storage businesses, as well as a 1% -1% -1%
Transfer LP
retails propane assets. Energy Transfer serves customers in the
United States.
Magellan Midstream Partners, L.P. is primarily involved in the
storage, transportation, and distribution of refined petroleum
products and ammonia. The Company's asset portfolio
Magellan
40 9,090 2,728 US includes a pipeline system serving the mid-continent region of 3% -1% -3%
Midstream
the United States, petroleum products marine terminal
facilities, petroleum products terminals, and an ammonia
pipeline system.
PetroVietnam Gas JSC transports, stores, and markets
petroleum gas. The company’s products include liquefied
petroleum gas, dry gas, compressed natural gas, and
PetroVietnam
3 6,134 3,229 VN liquefied natural gas. PetroVietnam's services include gas -1% -3% -6%
Gas
gathering, gas importation, gas transportation and
distribution, gas engine development and gas operation and
maintenance.
Inter Pipeline Ltd. operates as a major petroleum
transportation, bulk liquid storage and natural gas liquids
Inter Pipeline 9 3,726 1,911 CA -3% -4% -20%
extraction company. The Company owns and operates energy
infrastructure assets in western Canada and northern Europe.
Plains GP Holdings LP is a holding company. The Company,
through its subsidiaries, is involved in the transportation,
Plains GP
9 1,572 33,669 US storage, terminalling and marketing of crude oil, refined -5% -5% 40%
Holdings
products and LPG, as well as develops and operates natural
gas storage facilities.
Koninklijke Vopak NV is an independent tank terminal
Koninklijke operator. The Company provides conditioned storage
55 7,060 1,402 NL 2% -6% -9%
Vopak facilities for bulk liquids such as oil products, gaseous
chemicals, petrochemicals, biofuels and vegetable oils.
Bestsun Energy Co., Ltd is a natural gas distributor. The
Bestsun Company invests in natural gas pipelines, liquefied natural
1 1,158 707 CN 25% 30% 30%
Energy Co gas, and natural gas vehicle fillings stations. Bestsun also
provides gas appliances, installations, and maintenances.
Source: Bloomberg, Equirus, *Consensus Cagr over FY20-22E for AEGIS
July 10, 2020| 37

Exhibit 98: Global comparison

P/E EV/EBITDA P/B RoE
CMP Mkt Cap
Company
USD USD. Mn.
CY19A CY20E CY21E CY19A CY20E CY21E CY19A CY20E CY21E CY19A CY20E CY21E
AEGIS Logistics 2 811 63 18 15 22 10 8 4 4 3 7% 20% 21%
Kinder Morgan 14 31,457 15 21 16 11 10 9 1 1 1 6% 4% 7%
Energy Transfer LP 6 17,082 4 7 5 - 8 8 1 1 1 17% 12% 16%
Magellan Midstream 40 9,090 9 11 10 - 11 10 4 4 4 38% 34% 39%
PetroVietnam Gas 3 6,134 12 18 14 9 11 9 3 3 3 25% 16% 19%
Inter Pipeline 9 3,726 9 17 15 15 13 13 1 1 1 13% 7% 6%
Plains GP Holdings 9 1,572 11 - 8 - 14 10 1 1 1 17% -1% 8%

Hengyang
55 7,060 15 17 15 10 14 13 2 2 2 20% 13% 13%
Petrochemical Logistics
Commercial Corp &
1 1,158 11 7 7 7 - - 2 1 1 16% 27% 24%
Petroleum
Median 11 17 14 11 11 10 2 1 1 17% 13% 16%
Source: Bloomberg, Equirus, *Consensus estimates over FY20-22E for AEGIS
Exhibit 99: Comparison with Indian peers

P/E EV/EBITDA P/B RoE
CMP Mkt Cap INR.
Company
INR Mn.
FY20A FY21E FY22E FY20A FY21E FY22E FY20A FY21E FY22E FY20A FY21E FY22E
Gas handling &
Logistics
AEGIS Logistics 180 61,055 63 18 15 22 10 8 4 4 3 7% 20% 21%
Gujarat Gas 307 211,095 17 25 18 13 15 12 6 5 4 45% 23% 26%
Mahanagar Gas 970 95,800 13 14 12 8 10 9 3 3 3 30% 22% 23%
Indraprastha Gas 408 285,425 23 26 19 20 13 14 5 5 4 26% 22% 22%
Adani Gas 152 167,061 39 36 32 24 25 21 12 10 8 35% 28% 28%
Petronet LNG 262 392,400 15 12 11 10 7 6 4 3 3 27% 24% 24%
Gujarat State Petronet 209 117,906 7 9 8 5 5 4 2 2 2 45% 25% 21%
Median 17 18 15 13 10 9 4 4 3 30% 23% 23%
3PL
Mahindra Logistics 330 23,625 43 45 26 14 15 10 4 4 4 11% 7% 13%

Future Supply Chain
174 7,616 13 14 9 5 4 4 1 1 1 12% 8% 13%
Solutions
Transport Corp of India 172 13,176 9 12 8 8 8 6 1 1 1 15% 9% 13%
Median 13 14 9 8 8 6 1 1 1 12% 8% 13%
Trucking
VRL 159 14,369 16 20 13 6 9 6 2 2 2 15% 10% 14%
Blue Dart 2,016 47,843 - 44 26 12 16 13 10 9 8 -8% 13% 19%
TCI Express 662 25,395 35 26 28 20 22 26 9 7 6 31% 31% 24%
Median 25 26 26 12 16 13 9 7 6 15% 13% 19%
Rail Freight
Gateway Distriparks 88 9,617 9 37 16 5 8 6 1 1 1 8% 1% 4%
Container Corporation 430 262,088 21 26 20 14 16 13 3 2 2 4% 9% 12%
Median 15 32 18 10 12 9 2 2 2 6% 5% 8%
Source: Bloomberg, Equirus
July 10, 2020| 38

Investment risks
• Changes in government policy with regards to subsidised pricing of LPG and its substitutes may
have a dampening impact on gas division’s performance.
• A shift in consumer preferences towards alternate fuels like natural gas, electricity etc. instead of
LPG could also result in lower LPG demand. However, LPG is currently the cheapest and most
feasible cooking fuel for most of the Indian population.
• AEGIS' revenue growth and profitability are greatly dependent on the ability of Indian OMCs to
source LPG. A change in the macro environment, or in India's relationship with LPG-producing
nations, leading to a decline in Indian LPG imports could adversely impact AEGIS' financials.
• Inadequate port infrastructure and any changes in government policies on coastal regulations
pose a threat to terminalling business.
• Inordinate delays in renewing licenses and permits take a significant amount of time and resources
which could be deployed more productively.
• Project timelines could be extended due to the lengthy and complex process for securing
environmental permits.
• Increase in competition from upcoming terminals and OMCs' future investment in terminals could
impact pricing power and utilization of AEGIS' terminals.
July 10, 2020| 39

Company overview
AEGIS is a key player in the downstream Oil & Gas sector and is engaged in the business of Oil, Gas
and Chemical logistics services. The group operates in distinct but related business segments with a
network of bulk liquid handling terminals, liquefied petroleum gas (LPG) terminals, filling plants, LPG
distribution, and gas stations to deliver products and services. AEGIS Group also operates
internationally through its sourcing and trading subsidiaries located in Singapore. In FY20, its LPG
handling market share stood at ~21% of Indian LPG imports. The company serves industry clients
which include BPCL, HPCL, Reliance Industries, Shell, Essar Steel, Tata Steel.
The company has built in a robust infrastructure while it is implementing expansion plans at key strategic
locations. AEGIS has liquid terminals at key ports like Mumbai (273,000 KL), Kochi (51,000 KL),
Haldia (120,000 KL), Pipavav (120,000 KL), Mangalore (25,000 KL), Kandla (140,000 KL) and are
connected by pipelines to various berths for handling the export and import of hazardous chemicals,
petroleum products, and petrochemicals. AEGIS Group is a leader in the sourcing, shipping, and
distribution of LP gases (LPG and propane) into India and has handled about 3MMT of LPG in FY20.
AEGIS delivers both pressurized and refrigerated cargoes to several major ports on the coastline of
India, including at its own LPG terminals in Mumbai, Haldia and Pipavav. AEGIS also markets LPG
and propane in bulk to industrial clients in western India. AEGIS has a network of 115 Autogas stations
in 7 states and a network of 164 commercial distributors in 9 states.
Exhibit 100: Business mix
Gas Division
Liquid Division
•Business: •Business:
•Third party liquid logistics (3PL) •Third party Gas logistics (3PL)
•O&M services •Auto Gas Retailing and Packed LPG
Cylinders for Commercial segment
•Revenue Model: •Industrial Gas Distribution
•Fee based revenue •Marine Products Distribution
•Handling and other service charges (Bunkering)
•O&M fees •Gas Sourcing
•Revenue Model:
•Fee based revenue for gas logistics
•Fees for Sourcing Business
•Retail Margin for Gas Distribution
•Handling and Other Service Charges
July 10, 2020| 40

Corporate governance
Following are key highlights of our preliminary assessment of the level of corporate governance as per
AEGIS FY19 Annual Report:
Mr. Raj K Chandaria is the CMD and Mr. Anish K Chandaria is the Vice president and MD of the
company. The promoters hold ~59% of the total shares through three Mauritius entities. The company
operated nine subsidiaries of which seven are wholly owned subsidiaries. Board of Directors
Composition: The company’s Board had 2 Executive Directors and 6 non-Executive directors of whom
2 are non-Independent directors.
During the year ended 31 Mar’19, five board meetings were held and well attended by directors.
Distribution of power: The company has constituted four mandatory committees (Audit, Stakeholder
relationship, CSR, Nomination & Remuneration) and three non-mandatory committees (Share Transfer,
Occupational health safety and environment, Risk management). The Audit, Stakeholder relationship
and Nomination & remuneration committees are chaired by Independent directors.
Disclosure Norms: Our preliminary study reveals that AEGIS follows disclosure norms as stipulated by
listing agreements of exchanges and declares its quarterly results and other disclosures in a timely
manner. Management hold earnings call after every quarterly result.
Key management profile

Name Designation Description
He holds a BSc in Economics and an MBA from Boston University. Over the last 30 years he has spearheaded the
Mr Raj K Chandaria Chairman, MD
growth of Gas and Petroleum Distribution Business.
Mr. Anish Vice Chairman, He holds a B.A. (Economics) and an MBA from Wharton Business School. Over the last 22 years he spearheaded
Chandaria MD company’s entry in Autogas Business and has rich experience in Oil & Gas Industry.
Group President, He holds a Chemical Engineering degree and a Postgraduate in Marketing Management. He has over 20 years of
Mr. Sudhir Malhotra
COO hands on commercial experience in Oil, Gas & Chemical Industry. He has been associated with AEGIS since 1990.
He holds a Post Graduate degree in Business Administration and has over 25 years experience in downstream Oil
President (Business Industry in PSUs & MNCs. He handled B2B & B2C Marketing of Retail Fuels, Lubricants, LPG and Fuel Oil in
Mr. Rajiv Chohan
development)
India
Ms. Murad He is an FCA with 30 years of experience in Corporate Finance, Accounts & Taxation. He was instrumental in various
CFO
Moledina Corporate Restructuring actions including Acquisitions, Demerger, Buyback, etc.
President (Ops He holds a Chemical Engineering degree with over 30 years of experience in operations of Liquid & Gas Terminals.
Mr. K. S. Sawant
and Projects) He has wide experience of setting up Liquid & Gas Terminals at different Ports.
July 10, 2020| 41

Key milestones
Year Key milestones
1956 Year of establishment
1967 Entry into Specialty Chemicals
1977 Entry into Liquid logistics
1978 Maiden IPO and Listing
1995 Entry into LPG business
2003 Divestment of Specialty Chemicals
2005 Foray into Retail of Autogas
2006 Launch of O&M Business
2007 Acquisition: Sealord Containers (Mumbai) & Konkan Storage (Kochi)
2009 Established LPG Sourcing in Singapore
2010 Acquisition: Shell India LPG Business (Pipavav)
2012 Launch of Marine Products Distribution
2012 Expanding terminal capacity at Haldia & Pipavav
2013 Haldia Construction Complete
2014 Joint Venture with Itochu Corporation for LPG
2015 Land acquired at Kandla and Mangalore
2016 Announced new LPG terminal at Haldia
2016 Greenfield liquid terminal expansion at Kandla port
2016 Brownfield gas terminal expansion at Pipavav port
2017 Sold 19.7% stake in Haldia LPG to ITOCHU
2017 Pipavav LPG terminal expansion completed
2018 Completed Greenfield Capacity Expansion at Haldia
2018 Completed Debottlenecking of LPG Terminals at Mumbai
2018 Greenfield Liquid Terminal Expansion at Mangalore Port – 25,000 KL
2018 Liquid Terminal Expansion at Haldia Port – 35,000 KL
2019 Announced Kochi and Mangalore Liquid Capacity Expansion
2019 Announced Expansion of Liquid Capacity at Haldia port
2019 Completed Kandla Port – Expansion of Liquid Capacity – 40,000 KL
2019 Announced Haldia Port – Expansion of Liquid Capacity – 12,000 KL
2019 Announced Kandla LPG terminal greenfield project – 4MMTPA
July 10, 2020| 42

Company Snapshot
How we differ from Consensus
- Equirus Consensus % Diff Comment
FY21E 52,878 72,017 -27%
Sales
FY22E 68,301 87,672 -22% EBITDA for FY21 is largely in line
with consensus but we are bullish
FY21E 5,349 5,231 2% on Kandla gas terminal which
EBITDA
FY22E 7,066 6,329 12% shall give a higher throughput
and hence higher EBITDA in
FY21E 3,288 3,155 4% FY22.
PAT
FY22E 4,628 3,923 18%
Key Drivers
FY20 FY21E FY22E FY23E
Gas volumes ('000 MT)
Sourcing 1,861 1,350 1,650 1,815
Handling 3,026 3,300 4,655 5,345
Distribution 165 124 173 214
Our Key Investment arguments:

• Constraints in domestic LPG production to boost imports as consumption growth is expected
to remain steady
• Long term contracts and new capacities to bring in sustained volume growth over the years
• Optimisation of new capacities in the liquid segment to improve returns
Risks to Our View

• Changes in government policy with regards to subsidised pricing of LPG and its substitutes
may have a dampening impact on gas division’s performance.
• A shift in consumer preferences towards alternate fuels like natural gas, electricity etc. instead
of LPG could also result in lower LPG demand.
• Decline in Indian LPG imports could adversely impact AEGIS' financials.
• Inadequate port infrastructure and any changes in government policies on coastal regulations
pose a threat to terminalling business.
• Inordinate delays in renewing licenses and permits take a significant amount of time and
resources which could be deployed more productively.
Company Description:
AEGIS is a leading liquid (oil & chemicals) and gas terminal operator engaged in the handling of oil
& LPG products, and the sourcing, retailing and distribution of LPG. The company enjoys market share
of ~21% in LPG handling as a percent of total Indian LPG imports. The company has built in a robust
infrastructure while it is implementing expansion plans at key strategic locations. AEGIS has liquid
terminals at key ports like Mumbai, Kochi, Kandla, Haldia, Pipavav & Mangalore, and a network of
115 autogas stations in 7 states and a network of 164 commercial distributors in 9 states.
July 10, 2020| 43

Quarterly performance
Y/E Mar (Rs mn) 1QFY20A 2QFY20A 3QFY20A 4QFY20A 1QFY21E 2QFY21E 3QFY21E 4QFY21E
Revenue 19,553 18,177 21,686 12,417 9,938 13,359 14,457 15,125
COGS 18,058 16,482 19,693 10,487 8,470 11,745 12,622 13,202
Employee Cost 135 106 124 148 148 117 136 138
Other Expenses 340 325 353 430 179 240 260 272
EBITDA 1,020 1,264 1,518 1,352 1,141 1,256 1,439 1,513

Depreciation 159 170 172 187 187 187 212 226
EBIT 861 1,095 1,346 1,165 954 1,069 1,227 1,287
Interest Exp. 85 74 94 79 70 70 70 70
Other Income 62 26 46 195 52 52 52 52
Profit before Tax 839 1,046 1,298 1,281 936 1,051 1,209 1,269
Tax Expenses 215 (157) 284 394 187 210 242 254
Profit After Tax 623 1,204 1,014 887 748 841 967 1,015
Minority Interest (54) (72) (93) (125) (71) (71) (71) (71)
Profit/(Loss) from Associates 0 0 0 0 0 0 0 0
Recurring PAT 570 1,131 920 763 678 770 896 944
Exceptional Items 0 (1,545) (421) (421) (420) (170) (170) (170)
Reported PAT 570 (414) 499 341 258 600 726 774
Other comprehensive income. 0 0 0 0 0 0 0 0
PAT after comp. income. 570 (414) 499 341 258 600 726 774
FDEPS 1.6 3.3 2.7 2.2 2.0 2.2 2.6 2.7
Cost items as % of sales
RM expenses 92.4 90.7 90.8 84.5 85.2 87.9 87.3 87.3
Employee expenses 0.7 0.6 0.6 1.2 1.5 0.9 0.9 0.9
Other expenses 1.7 1.8 1.6 3.5 1.8 1.8 1.8 1.8
Margin (%)
Gross Margin 7.6 9.3 9.2 15.5 14.8 12.1 12.7 12.7
EBITDA Margin 5.2 7.0 7.0 10.9 11.5 9.4 10.0 10.0
PAT Margin 2.9 6.2 4.2 6.1 6.8 5.8 6.2 6.2
YoY Growth (%)
Sales 92.3 27.5 64.2 (33.0) (49.2) (26.5) (33.3) 21.8
EBITDA 18.0 42.5 63.9 31.1 11.8 (0.6) (5.2) 11.9
EBIT 15.8 43.5 68.9 29.4 10.8 (2.3) (8.8) 10.5
PAT 10.3 0.0 (15.6) (44.7) (54.8) 0.0 45.5 126.9
July 10, 2020| 44

Key Financials (Consolidated)

Income Statement
Y/E Mar (Rs mn) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Revenue 39,303 47,910 56,158 71,833 52,878 68,301 77,801
COGS 35,669 43,545 50,380 64,719 46,038 59,413 67,720
Employee Cost 458 471 515 512 539 593 652
Other Expenses 1,140 1,234 1,554 1,448 952 1,229 1,400
EBITDA 2,036 2,660 3,709 5,153 5,349 7,066 8,029

Depreciation 238 343 505 687 812 920 959
EBIT 1,798 2,317 3,203 4,466 4,537 6,146 7,070
Interest Exp. 163 152 262 331 280 229 224
Other Income 57 84 82 328 207 301 641
Profit before Tax 1,691 2,248 3,023 4,464 4,464 6,218 7,487
Tax Expenses 362 110 502 736 893 1,244 1,497
Profit After Tax 1,330 2,138 2,521 3,728 3,571 4,975 5,990
Minority Interest (137) (160) (307) (344) (283) (347) (404)
Profit/(Loss) from Associates 0 0 0 0 0 0 0
Recurring PAT 1,192 1,978 2,214 3,384 3,288 4,628 5,586
Exceptional Items 0 0 0 (2,388) (930) (170) 0
Reported PAT 1,192 1,978 2,214 996 2,358 4,458 5,586
Other comprehensive income. 0 0 0 0 0 0 0
PAT after comp. income. 1,192 1,978 2,214 996 2,358 4,458 5,586
FDEPS 3.6 5.9 6.6 10.0 9.5 13.2 15.9
DPS 1 1 1 2 2 2 3
BVPS 25 36 42 49 56 66 79
YoY Growth (%) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Sales 77.6 21.9 17.2 27.9 (26.4) 29.2 13.9
EBITDA 9.8 30.7 39.4 39.0 3.8 32.1 13.6
EBIT 11.0 28.9 38.3 39.4 1.6 35.5 15.0
PAT 5.2 65.9 11.9 (55.0) 136.8 89.1 25.3
Key Ratios
Profitability (%) FY17A FY18A FY19A FY20A FY21E FY22E FY23E
Gross Margin 9.2 9.1 10.3 9.9 12.9 13.0 13.0
EBITDA Margin 5.2 5.6 6.6 7.2 10.1 10.3 10.3
PAT Margin 3.0 4.1 3.9 4.7 6.2 6.8 7.2
ROE 16.1 19.9 18.4 23.2 18.8 22.1 22.0
ROIC 13.7 16.3 16.3 20.4 17.7 20.9 20.1
Core ROIC 14.9 17.8 19.8 25.1 19.8 24.1 26.5
Dividend Payout 19.6 14.4 19.0 17.1 17.0 17.0 17.0
CAGR (%) 1 year 2 years 3 years 5 years 7 years 10 years

Revenue 28% 22% 22% 13% 9% 37%
EBITDA (Adjusted) 39% 39% 36% 29% NA 22%
PAT (Adjusted) 53% 31% 42% 36% 39% 23%
Valuation (x) FY17A FY18A FY19A FY20A FY21E FY22E FY23E

P/E 50.5 30.4 27.2 18.1 18.9 13.7 11.3
P/B 7.2 5.0 4.3 3.7 3.2 2.7 2.3
P/FCFF (133.1) (56.8) 15.2 (232.3) 72.4 16.0 12.7
EV/EBITDA 32.8 33.0 17.8 11.8 11.3 8.1 6.6
EV/Sales 1.7 1.8 1.2 0.8 1.1 0.8 0.7
Dividend Yield (%) 0.4 0.5 0.7 0.9 0.9 1.2 1.5
July 10, 2020| 45

Balance Sheet
Equity Capital 334 334 334 340 345 351 351
Reserves 8,038 11,739 13,579 16,206 18,930 22,765 27,401
Net Worth 8,372 12,073 13,913 16,546 19,275 23,116 27,752
Total Debt 2,548 3,040 2,388 2,156 985 985 985
Other long term liabilities 248 259 1,172 3,626 3,536 3,441 3,342
Minority Interest 292 697 748 906 1,189 1,536 1,940
Account Payables 6,778 3,788 4,853 4,016 2,956 3,818 4,349
Other Current Liabilities 2,117 2,282 1,213 1,958 1,958 1,958 1,958
Total Liabilities 20,355 22,139 24,287 29,207 29,899 34,855 40,326
Gross Fixed Assets 7,604 13,288 14,254 14,986 20,396 21,603 22,822
Acc. Depreciation (133) (476) (979) (1,492) (2,129) (2,874) (3,659)
Net Fixed Assets 7,471 12,811 13,275 13,495 18,266 18,728 19,163
Capital WIP 3,127 1,256 1,207 2,201 0 0 0
long term investments 2 0 0 0 0 0 0
Others 1,309 1,790 2,209 4,500 4,325 4,150 3,976
Inventory 218 260 338 421 310 400 456
Receivables 7,059 3,469 2,285 4,540 4,346 5,614 6,395
Loans and advances 0 0 0 0 0 0 0
Other current assets 535 921 727 1,330 979 1,265 1,441
Cash & Cash Equivalents. 623 1,620 4,234 2,707 1,660 4,684 8,883
Total Assets 20,355 22,139 24,287 29,207 29,899 34,855 40,326
Non-Cash WC (1,084) (1,420) (2,612) 391 794 1,576 2,057
Cash Conv. Cycle 4.6 (0.4) (14.5) 4.8 11.7 11.7 11.7
WC Turnover (36.3) (33.7) (21.5) 183.6 66.6 43.3 37.8
Gross Asset Turnover 5.2 3.6 3.9 4.8 2.6 3.2 3.4
Net Asset Turnover 3.7 3.4 3.9 4.6 2.9 3.6 4.1
Net D/E 0.2 0.1 (0.1) 0.0 0.0 (0.2) (0.3)
Days (x) FY17A FY18A FY19A FY20A FY21E FY22E FY23E

Receivable Days 66 26 15 23 30 30 30
Inventory Days 2 2 2 2 2 2 2
Payable Days 63 29 32 20 20 20 20
Non-cash WC days 5 0 (14) 5 12 12 12
Cash Flow
Profit Before Tax 1,691 2,248 3,023 2,076 4,464 6,218 7,487
Depreciation 238 343 505 687 812 920 959
Others 113 93 208 2,472 73 (72) (417)
Tax paid (287) (577) (624) (736) (893) (1,244) (1,497)
Change in WC 14 (192) 2,450 (3,036) (403) (782) (481)
Operating Cashflow 1,770 1,915 5,563 1,463 4,053 5,041 6,051
Capex (2,229) (2,991) (1,541) (1,726) (3,208) (1,207) (1,220)
Change in Invest. 5 3 1 (116) 0 0 0
Others 61 28 48 328 207 301 641
Investing Cashflow (2,201) (2,962) (1,547) (1,514) (3,001) (906) (578)
Change in Debt 982 175 (851) (232) (1,171) 0 0
Change in Equity 0 2,393 0 0 0 0 0
Others (515) (726) (580) (1,026) (929) (1,110) (1,273)
Financing Cashflow 467 1,842 (1,431) (1,258) (2,100) (1,110) (1,273)
Net Change in Cash 36 795 2,585 (1,309) (1,048) 3,024 4,199
Source: Company, Equirus Research
July 10, 2020| 46

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Parth Kamdar parth.kamdar@equirus.com 91-79-61909528
Rushabh Shah rushabh.shah@equirus.com 91-79-61909520
Shreepal Doshi shreepal.doshi@equirus.com 91-79-61909541
Equity Sales E-mail
Girish Solanki girish.solanki@equirus.com 91-22-43320634
Subham Sinha subham.sinha@equirus.com 91-22-43320631
Pooja Mehta pooja.mehta@equirus.com 91-22-43320636
Viral Desai viral.desai@equirus.com 91-22-43320635
Vishad Turakhia vishad.turakhia@equirus.com 91-22-43320633
Cash Dealing Room
Bhavik Shah bhavik.shah@equirus.com 91-22-43320669
Dharmesh Mehta dharmesh.mehta@equirus.com 91-22-43320661
Gaurav Mehta gaurav.mehta@equirus.com 91-22-43320680
Manoj Kejriwal manoj.kejriwal@equirus.com 91-22-43320663
Vikram Patil vikram.patil@equirus.com 91-22-43320677
Compliance Officer
Jay Soni jay.soni@equirus.com 91-79-61909561
Corporate Communications
Mahdokht Bharda mahdokht.bharda@equirus.com 91-22-43320647
Quant Analyst
Kruti Shah kruti.shah@equirus.com 91-22-43320632
F&O Dealing Room
Kunal Dand kunal.dand@equirus.com 91-22-43320678
Mukesh Jain mukesh.jain@equirus.com 91-22-43320667
Shrikant Pandya shrikant.pandya@equirus.com 91-22-43320660
Rating & Coverage Definitions: Registered Office:

Absolute Rating Equirus Securities Private Limited
• LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion Unit No. 1201, 12th Floor, C Wing, Marathon Futurex,
and ATR >= 20% for rest of the companies N M Joshi Marg, Lower Parel,
• ADD: ATR >= 5% but less than Ke over investment horizon Mumbai-400013.
• REDUCE: ATR >= negative 10% but <5% over investment horizon Tel. No: +91 – (0)22 – 4332 0600
• SHORT: ATR < negative 10% over investment horizon Fax No: +91- (0)22 – 4332 0601
Relative Rating
• OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon Corporate Office:
• BENCHMARK: likely to perform in line with the benchmark 3rd floor, House No. 9,
• UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge,
Investment Horizon S.G. Highway Ahmedabad-380054
Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of Gujarat
a calendar quarter. Tel. No: +91 (0)79 - 6190 9550
Fax No: +91 (0)79 – 6190 9560
July 10, 2020| 47

© 2020 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Equirus Securities
Private Limited
Analyst Certification
I, Depesh Kashyap, CFA/Narendra Mhalsekar, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their
securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures
Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC176044 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the Capital
Market (Reg. No. INB231301731), Futures & Options Segment (Reg. No.INF231301731) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB011301737) of Bombay Stock Exchange
Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 2014 (Reg. No. INH000001154), as a Portfolio Manager under SEBI (Portfolio Managers Regulations, 1993
(Reg. No.INP000005216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP-324-2017). There are no disciplinary actions taken by any regulatory authority against ESPL.
ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to merchant banking services, private
equity, mergers & acquisitions and structured finance.
As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for investment
banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have received a mandate
from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may
from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in their proprietary position) 1% or more of
the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or Associates did not receive any compensation or
other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor Research Analysts have any material conflict of interest at the
time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ESPL has not been engaged in market
making activity for the subject company.
The Research Analyst engaged in preparation of this Report:-
(a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months; (c) has
not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or services
other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third
party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company.
This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication,
availability or use would be contrary to law, regulation or which would subject ESPL and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be
eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession of this document are required to inform themselves of, and to observe, such applicable restrictions. Please delete this
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This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not soliciting any action based on this
report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as to its accuracy
or completeness. The information contained herein is as on date of this report, and is subject to change or modification and any such changes could impact our interpretation of relevant information contained herein.
While we would endeavour to update the information herein on reasonable basis, ESPL and its affiliates, their directors and employees are under no obligation to update or keep the information current. Also there may
be regulatory, compliance, or other reasons that may prevent ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the
basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to
in this document including the merits and risks involved. This document is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any
particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on
the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with companies covered in its research report. Thus, investors should be aware that the firm may
have conflict of interest.
A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and www.bseindia.com (Choose a company from the list on the browser and select the “three
years” period in the price chart).
Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest
Research Analyst’ or Relatives’ financial interest No
Research Analyst’ or Relatives’ actual/beneficial ownership of 1% or more No
Research Analyst’ or Relatives’ material conflict of interest No
Disclaimer for U.S. Persons

Equirus Securities Private Limited (ESPL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition
ESPL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States.
Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by ESPL, including the products and services described herein are not available to or intended for U.S.
persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional
investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act")
and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., ESPL has entered into a chaperoning agreement with a U.S.
registered broker-dealer name called Xtellus Capital Partners, Inc, (''XTELLUS'). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
"U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US
Persons" under certain rules.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, XTELLUS, and
therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
July 10, 2020| 48

Aegis Logistics-Initiating Coverage - 10.07.2020 - Equiris

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Aegis Logistics-Initiating Coverage - 10.07.2020 - Equiris

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Aegis Logistics

Play on India’s rising LPG imports; initiate with LONG

Active LPG Connections (mn) | LPG Coverage (%) 97%

149mn 167mn 199mn 224mn 265mn 276mn

FY15 FY16 FY17 FY18 FY19 FY20

July 10, 2020

Depesh Kashyap, CFA (depesh.kashyap@equirus.com, +91-7228934327)

AEGIS: Story in charts

LPG Consumption ('000 MT) 2.4% 0.9%

10,000 Auto LPG

Source: Equirus, Industry Data Source: Equirus, Industry Data

July 10, 2020| 2

July 10, 2020| 3

LPG imports continue to rise to satiate ever-growing demand

Other Refinery Other Gas US/Canada US/Canada Latin America Europe/CIS

US LPG exports ('000 barrels per day)

Source: Equirus, EIA

July 10, 2020| 4

India is among world’s top 3 LPG consumers

LPG Consumption ('000 MT) 2.4% 0.9%

10,000 Auto LPG

Source: Equirus, PPAC Source: Equirus, IOC

Government promotes LPG as domestic cooking fuel

July 10, 2020| 5

Exhibit 14: Government focus to promote household consumption of LPG

Year Government Policies Description

• Launched in 2009 to cover more rural households

• A scheme that appeals to well-off citizens to voluntarily surrender their subsidies to

• A scheme launched to provide LPG connections to 50mn women belonging to the

Source: GOI, Equirus

July 10, 2020| 6

Source: Equirus, Industry Data Source: Equirus, Industry Data

148.6 166.3 198.8 224.3 265.4 275.9

July 10, 2020| 7

Source: Equirus, NITI Aayog Source: Equirus, NITI Aayog

Exhibit 21: PNG and LPG – consumer cost dynamics

Installation cost (incl. Security deposit) (Rs) 2400 6500

Source: Equirus, AEGIS, Gujarat Gas, HPCL; *Prices as on 16 Jun’20

July 10, 2020| 8

LPG Demand (MMT)

Source: Equirus, IOCL Source: Equirus, MoPNG

Non-domestic usage of LPG to gain traction

49.0% Industrial Non-Domestic

21.6% Other Sectors

Source: Industry data, Equirus Source: Industry data, Equirus

Source: Company Data, Equirus

July 10, 2020| 9

Bio Fuels PNG

Source: Company Data, Equirus Source: Company Data, Equirus

Exhibit 29: LPG non domestic usage – potential market

July 10, 2020| 10

Source: Equirus, WLPG Data

July 10, 2020| 11

Auto LPG – the most efficient fuel

Turkey 3.20 400 200%

Lower LPG penetration in transport can be attributed to inadequate infrastructure (compared to

Exhibit 32: Autogas economics better than CNG at current prices