Aegis Logistics : Q4 FY 2023 Earnings Call Transcript

"Aegis Logistics Limited Q4 FY'23 Earnings

Conference Call"

June 01, 2023

MANAGEMENT: MR. RAJ CHANDARIA - CHAIRMAN AND MANAGING DIRECTOR - AEGIS LOGISTICS LIMITED

MR. MURAD MOLEDINA - CHIEF FINANCIAL OFFICER

• AEGIS LOGISTICS LIMITED

MODERATOR: MS. PAYAL DAVE - ORIENT CAPITAL

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Aegis Logistics Limited

June 01, 2023

Moderator:Ladies and gentlemen, good day, and welcome to the Q4 FY '23 Earnings Conference Call of Aegis Logistics Limited. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.

Today on this call, we have Mr. Raj Chandaria, Chairman and Managing Director; and Mr. Murad Moledina, Chief Financial Officer. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

A detailed safe harbor statement is given on Page 2 of the company's investor presentation which has been uploaded on the stock exchanges as well as the company's website. With this, I now hand the call over to Mr. Raj Chandaria for his opening remarks. Thank you, and over to you, sir.

Raj Chandaria:Thank you very much. Yes. Good afternoon, everybody. I'm joined by our Chief Financial Officer, Mr. Murad Moledina, and we will be presenting the Q4 and FY '23 financial results, various business updates and the outlook for the full year of FY '24.

Before I move on to discussing the financial performance for the full year of 2023, I'm pleased to inform you that the Board of Directors has recommended a final dividend of INR1.25 per share for the face value of INR1 for the financial year ended March 2023. And with this, the full year dividend, including the 3 interim dividends already given during the year works out to be

5.75 per share -- INR5.75 per share for the face value of INR1 share, i.e., that's 575% of the face value.

So I'd also like to draw your attention to our new vision and mission statement, which reflects the change in the global business environment. As you all know, India is not insulated from the problem of climate change. And India's international commitments have now put us firmly on a path to sustainability. As a company that is building and operating energy infrastructure, we believe we can play our part in moving India from using dirty fuels to cleaner fuels. And our core purpose of vision, therefore, is to support India's transition towards a more sustainable future. And our mission is to store and distribute both liquids and gases in a safe and sustainable manner.

Now our strategy, of course, remains consistent with this mission. And in that regard, 2023 has been a very eventful year. -In FY '23, we delivered growth through a combination of mergers and acquisitions and organic growth. And we have now embarked on the largest capex implementation in the history of the company, and I'm pleased to say that it's progressing well, and I'll cover this in more detail later in the call.

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Aegis Logistics Limited

June 01, 2023

So just to highlight the financial numbers, we have once again delivered record-breaking performance in FY '23. The revenues increased by 86% to INR8,627 crores versus INR4,631 crores on a consolidated basis. The EBITDA of INR804 crores was an increase of 37% compared to FY '22 and the highest ever. The profit after tax was INR511 crores, representing a growth of 33% over FY '22 and this resulted in an earnings per share of INR13.19 when -- as compared to INR10.19 in FY '22, which is an increase of 29%.

I think you will agree with me that these results are consistent with our quarterly updates during the past year. It is the outcome of a successfully executed joint venture with Vopak. The acquisition of an additional 0.5 million cubic meters of liquid capacity, a flawless ramp-up of the new Kandla LPG terminal, and take-off in the distribution business. Furthermore, as the new projects now being implemented are commissioned, we are confident that the positive momentum that we saw in FY '23 will be sustained in FY '24 and onwards. Now before I move on to discuss specific business updates, let me hand over to Mr. Moledina, to give you more details on the performance of each division. Murad, can I hand over to you?

Murad Moledina:Yes. Good afternoon, everyone. Both our divisions delivered a record performance in the last year. Let's first take up liquid division. The revenue for FY '23 was INR417.9 crores, a lifetime high versus INR270 crores in FY '22. That is an increase of 55%. The EBITDA for the year for liquid rose to INR271.5 crores versus INR195 crores in the previous year, which is again an increase of 39%.

Gas division. Revenues in FY '23 was INR8,209.2 crores versus INR4,361 crores in FY '22, a growth of 88% year-on-year.

The increase in revenue was largely led by increasing volumes in the sourcing business, which increased by 66% in the last year. EBITDA for FY '23 was INR532.2 crores versus INR390.2 crores in FY '22, delivering a growth of 36%. We continue to see growth for Gas division with increasing volumes in all subdivisions, sourcing, throughput and distribution. Let me give you the volume details of each.

Throughput volumes. The LPG volume for Q4 FY '23 ended at our 4 terminals: Mumbai, Haldia, Kandla and Pipavav were 8.77 lakh metric tons versus 8.01 lakh metric tons in Q4 FY '22. That is an increase of 9%.

For the full year of FY '23, we handled 33.3 lakh metric tons versus 28.6 lakh metric tons in FY '22, an increase of 17%. This was despite lower volumes at Haldia on account of taking up upgradation of both the jetties during the year where we handle LPG.

The jetty at Pipavav has also now been upgraded to handle VLGC. The LPG rail gantry at Pipavav continues to perform well and is delivering considerable cost savings to our customers, which is driving improved volumes.

Mumbai continues to operate at full capacity with IOC, BPCL and HPCL, bringing imports. Kandla LPG terminal is also fully operational and has started to deliver on our expectations.

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Aegis Logistics Limited

June 01, 2023

	Let's see distribution volumes, commercial and industrial. The commercial and industrial bulk
	segment handled 1.31 lakh metric tons in Q4 FY '23 against the 0.45 flat metric tons in Q4 FY
	'22, registering a growth of 193%. And for the full year FY '23, the segment handled 4.74 lakh
	metric tons versus 1.38 lakh metric tons in FY '22, an impressive growth of 243%. This is a
	lifetime record performance for this division and with stable margins.
	With Kandla LPG terminal operationally stabilized, we believe that the distribution business
	will continue to register impressive growth going forward.
	Autogas sales were lower at 4,880 metric tons in Q4 versus 6,180 metric tons in Q4 on year-
	over-year. However, for the full year FY '23, the Autogas sales were 20,228 metric tons versus
	21,700 metric tons in FY '22. The margins in this business continue to remain stable.
	Sourcing volume. The sales volume of sourcing business in Q4 FY '23 was 2.37 lakh metric tons
	versus 2.70 lakh metric tons in Q4 FY '22. For the full year '23, the sourcing volumes were 8.95
	lakh metric tons versus 5.56 lakh metric tons in FY '22, a growth of 61%. As reported previously,
	we expect this increase in volumes to continue throughout the calendar year of 2023. With that,
	I would now like to hand over the line back to Mr. Raj Chandaria to give you an update on capex
	and outlook going forward.
Raj Chandaria:	Thank you. Okay. So now let me turn to the business update for the last year and the outlook
	for the coming year and an update on our capex plan. For the liquid division, we expect our
	liquids business with its leading position in the key ports of India to perform well for FY '24,
	especially considering the good economic growth in the country.
	The liquids expansion of 50,000 kiloliters at Haldia, which we referred to as H5 is now complete
	and fully commissioned. The additional 5,50,000 kiloliters acquired from Friends Group during
	the last year is now available for use for the full year of FY '24, and our capacity expansions at
	Kochi of 50,000 kiloliters and Mangalore of 70,000 kiloliters will be commissioned towards the
	end of FY '24.

I'm really pleased to announce that we have now added JNPT to our net list of terminals, which

• and are currently building liquid tanks with a capacity of 1,10,000 kiloliters as a first step. We expect to commission this in mid-2024. So in summary, at the moment, we have just commissioned 50,000 kiloliters of liquid tankage and have an additional 230,000 kiloliters under construction, which will be fully available in FY '25.

As far as the Gas division is concerned, during the last year, Pipavav port completed its work on making the LPG jetty compliant for handling VLGCs, with commissioning now expected once the permit -- final permit has been received, which will further improve the competitiveness of Pipavav as a logistics hub.

In the last year, we were in the process of connecting to the Kandla Gorakhpur LPG pipeline for both Pipavav and Kandla LPG terminals and looking up to the Jamnagar LPG pipeline for the Kandla terminal.

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Aegis Logistics Limited

June 01, 2023

	So in future, these terminals will become critical and leading gateways for the feeding of the key
	LPG pipelines of India going north and into Central India. The additional capacity of 3,000
	metric tons of spheres at Pipavav is progressing well and expected to be commissioned in Q2.
	I'm also pleased to inform you that the construction of a new cryogenic LPG terminal at Pipavav
	with a capacity of 48,000 metric tons is underway. And I'm also excited to confirm that the
	commencement of work at Mangalore of what -- when completed, will be India's largest
	cryogenic LPG terminal with a capacity of 80,000 metric tons.
	Let me repeat that. It will be India's largest cryogenic terminal with a capacity of 80,000 metric
	tons at Mangalore port.
	So in summary, an additional static capacity of 131,000 metric tons of static LPG terminal in
	capacity is currently under construction. We expect the distribution business, which performed
	well in FY '23, to continue to grow. We continue to expand the footprint of our network of fuel
	stations and cylinder filling plants with the completion -- recent completion of an additional
	filling plant at Pipavav.
	Lastly, the Aegis Vopak joint venture, AVTL, has achieved a successful financial closure in the
	last fiscal year. Our management teams are now fully integrated and performing well. We are
	together constantly evaluating business opportunities and proposals and are confident that the
	combination of our strengths will lead to some interesting projects in the future. We are
	extremely well capitalized for future growth projects, and we'll keep you updated as we make
	further progress in this direction.
	So in summary, all these developments position us very well to continue executing on our
	mission while storing and distributing bulk liquids and gases in a safe, sustainable manner. And
	in doing so, we remain confident to be able to deliver good financial results in FY '24 as well.
	So with that, I conclude my formal remarks, and I can now open the floor to questions and
	answers.
Moderator:	Thank you very much. The first question is from the line of Priyankar Biswas from Nomura.
Priyankar Biswas:	Congratulations for the decent quarter. My first question is I missed the numbers for the
	commercial and bulk volumes for 4Q FY '23. So if you can repeat that first?
Murad Moledina:	136.1 -- 136,100 metric tons.
Priyankar Biswas:	No, no. So I am saying within the distribution, what's the split of commercial and...
Murad Moledina:	Industrial is 131,230 metric tons.
Priyankar Biswas:	Sir, the next question is, I'm sure you would be aware that today, the Saudi CP prices have been
	cut down quite sharply. So I guess, more than $100 plus. And at the same time, what I understand
	is that Gujarat Gas has also have been cutting these P&G prices also parallelly.
	So how is the dynamics shaping up? And what sort of distribution volumes, let's say, can we
	expect in the first half?
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