Aegis continued reporting very good nos (23% growth in EBITDA, 36% growth in EPS). Even with QoQ decline in distribution volumes, they were able to increase absolute EBITDA by focusing on product mix. Another important trend was terminalling volumes crossed 1mn MT this quarter, and management seemed confident of reaching 4mn MT in FY24. Pipavav will likely drive LPG volume growth in next few quarters. Concall notes below.
FY24Q2 concall
- Pipavav:
o 2 additional spheres commissioned (3700 MT static capacity)
o Cryogenic 45k MTPA will be tanked with the jetty that Gujarat Pipavav is building (Gujarat Pipavav’s $90mn investment)
o The jetty has already been upgraded to birth VLGC and railway gantry is doing large volumes, feeding in-land demand in that region
o Very very bullish on Pipavav LPG operations
o Started doing renewable fuels in Pipavav
o Will see a step growth once KGPL pipeline gets commissioned in December 2024 - Kandla: Kandla Gorakhpur pipeline: work is going at full stretch and pipeline is expected to start by January 2025
- Mumbai: JNPT liquid terminal is expected to finish by end of FY24
- Mangalore: Liquid capacity is expected to finish by end of FY24
- Kochi: Liquid capacity is expected to finish by end of FY24
- Sourcing volumes: 1.74 lakh MT in Q2 (vs 2.28 lakh MT in Q2FY23). Reported sourcing volumes is only for outside sales (not for their own retailing volumes)
- Terminaling volumes: 1’020’000 MT in Q2 (vs 832’000 MT in Q2FY23). Hoping to get to 4mn MT in FY24
- Commercial & Industrial: 131’000 MT in Q2 (vs 159’000 MT in Q1FY24, 116’000 MT in Q2FY23). With Kandla rampup, expect consistent growth in commercial & industrial volumes
- Bulk industrial volumes: didn’t give breakup as it now accounts for 80% of distribution volumes
- 90% of LPG usage is in household consumption as cooking gas. Have seen huge adoption of propane and LPG for industrial usage in last year
- 15-25% discount between propane and natural gas. Conversion of natural gas to propane equivalent is current price of NG (Rs. 46)/0.75 + 6% VAT ~ 65
- Hurdle rate is always 15% on any capex and 20% margins, with gearing of 0.6, expect ROE of 35-40%
Disclosure: Invested (position size here, bought shares in last-30 days)