Aegis Logistics

8/14/2019 Aegis Logistics

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Aegis Logistics (AEGCHE)

Niche player expands scope

Aegis Logistics, a leader in oil and gas logistics, is expanding its liquid

storage capacities to ride the soaring demand for oil and petroleum

products. It already has a strong presence in Mumbai, and is now

expanding to other ports to capitalise on the expansion in the usage of

oil/gas products. The company has also forayed into the auto liquefied

petroleum gas (LPG) business through its Autogas stations.

Increasing demand for oil & chemical logistics to boost growthIndia is currently the fifth biggest energy consumer in the world and is

expected to become the third largest consumer by 2030. Given the soaring

demand for petroleum and petroleum-based products, we believe there will

be a massive demand for logistics services like port operations, tankage,

transportation and pipeline logistics.

Capacity expansion of high-margin liquid storage facilityAegis is a major player in liquid logistics with a strong presence in Mumbai.

It intends to increase its liquid storage capacities to 344,000 kl (kilo-litres) by

the end of FY10, and also expand its reach to other port locations like Kochi,

Haldia (Kolkata) JNPT and Mangalore. To achieve this, it has adopted a mix

of organic as well as inorganic route.

Foray into high-growth auto LPG retail businessThe company has set up a retail network of 24 gas stations through which it

sells automotive LPG under the Aegis Autogas brand name. It plans to

aggressively increase its retail presence to 150 gas stations by the end FY10.

We believe demand for LPG will increase and the auto gas retailing business

will be one of the major growth drivers for Aegis.

ValuationsAt the current price of Rs 275, the stock is trading at 15.03x its FY08E EPS of

Rs 18.30 and 9.23x its FY09E EPS of Rs 29.81. On an EV/EBIDTA basis, the

stock is available at 9.92x FY08E earnings and 6.60x FY09E earnings. We

believe that the company is likely to benefit from the growth in Indias

energy consumption. We rate the stock an OUTPERFORMER and set a price

target of Rs 417, 14x FY09E earnings.

Exhibit 1: Key Financials

Year to March 31 FY06 FY07 FY08E FY09E FY10E

Revenue (Rs cr) 154.50 240.38 356.20 518.61 713.87

Net Profit (Rs cr) 30.20 21.55 36.49 59.44 87.76

EPS (Rs) 18.52 13.22 18.30 29.81 44.01

% Growth 172.4% -28.6% 38.5% 62.9% 47.6%

P/E (x) 14.04 20.81 15.03 9.23 6.25

Price/Book (x) 43.84 21.76 25.88 33.03 38.41

EV/EBIDTA (x) 12.16 16.47 9.92 6.60 4.52

NPM (%) 19.55 8.96 10.25 11.46 12.29

RoNW (%) 30.29 18.48 24.87 30.29 32.03

RoCE (%) 29.42 16.45 23.00 28.97 33.31Source: ICICIdirect Research

Initiating coverage

ICICIdirect | Equity Research

January 30, 2008| Logistics

Sales & EPS trend

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Rscr

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Stock metricsPromoters holding 63.7%

Market Cap Rs 448 crore

52 Week H/L 404 / 111

Sensex 17,222

Average volume 43,954

Comparative return metrics

Stock return 3 M 6M 12M

Aegis 62% 81% 62%

TCI -4% 3% 47%

Gateway Distriparks -23% -27% -33%

Price trend

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SharePrice(Rs)

OUTPERFORMER

Current priceRs 275

Target priceRs 417

Potential upside52%

Time Frame12 months

Analysts Names

Siddhartha [email protected]

Ember [email protected]

Target Price

Absolute Buy


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Company Background

Aegis Logistics was founded in 1956 and started operations as a

specialty chemicals manufacturer supplying to the paintsindustry. In 1977, the company diversified into liquid logisticsmanagement when it set up a port terminal in Mumbai tohandle ships carrying cargo of chemicals. The company furtherdiversified into port handling and storage of oil & petroleumproducts, as well as distribution and storage facilities for gasessuch as LPG and propane.

Post liberalisation, the company set its sight on the growinglogistics business and divested its chemical manufacturing facilities to concentrate on providing total supply chainmanagement solutions for moving oil, gas and chemicals.

An ISO 9001-2000, ISO 14001-1996 & OHSAS 18001 certifiedcompany, Aegis has graduated from being a chemicalsmanufacturer to a leading liquid logistics solutions provider inIndia.

With rising oil prices, the company identified the underlyingpotential in the LPG retailing business and is now increasinglyshifting its focus towards the gas division, which accounted for79.7% of its revenues in FY07. In order to grow its LPGbusiness, the company entered the Auto gas retailing businessin FY06.

Share holding pattern

Share holder % holding

Promoters 63.71

Institutional investors 4.50Other investors 5.76

General public 26.03

Promoter & Institutional holding trend

63.7 63.7 63.7 63.7

1.6 2.2 2.2 4.5

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70

Q4FY07 Q1FY08 Q2FY08 Q3FY08

(%

Promoters Institutional investors

Aegis Logistics

Exhibit 2: Revenue Model Standalone (FY07)

Total Revenues: Rs 240.38 crore

Liquid Division20.3%

Gas Division79.7%

PBIT margins5.2%

Net profit margins

9.0%Source: Company, ICICIdirect Research

Storage & Trading Auto gasTank storage andterminaling

PBIT margins54.6%


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INVESTMENT RATIONALE

Liquid DivisionAegis provides logistics to importers and exporters of liquid oil, chemicals and

petroleum products. It operates a terminal at Trombay which is connected tothree jetties at Mumbai Port. Mumbai port is strategically located on the

western coast and is in the heartland of India's chemical and petrochemical

belt. The terminal has ISO 9001-2000 Quality Management System (QMS) and

ISO 14001-1996 Environmental Management System (EMS) certification.

Major player in MumbaiAegis is in the business of storing, handling and distributing oil products,

chemicals and gas. It has a strong foothold in Mumbai, where it owns facilities

to provide such services. The companys forte is handling liquid products.

The company offers integrated supply chain services to exporters and

importers of petroleum, petrochemical and specialty chemical products.Service offerings include sourcing, shipping, custom clearance, storage and

distribution (through road or pipeline movement) of products.

It has a modern liquid terminal connected to three jetties at Mumbai port with

total storage capacity of 162,000 kl (kilo-litres). The company has significant

advantage due to its proximity with the country's two major refineries,

Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum

Corporation (BPCL). Aegis forms a critical part of the supply chain of HPCL and

BPCL, which are connected with dedicated pipelines to provide quality logistic

support with minimal losses.

Increasing demand for oil & chemical logistics to boost growthIndia is currently the fifth biggest energy consumer in the world and is one of

the world's fastest growing energy consumers. It is projected to become the

third largest consumer by 2030. Demand for petroleum products has increased

at a CAGR of 3% from 100.1 million tonnes in FY01 to 119.5 million tonnes in

FY07. India imports about 73% of its oil requirement, and its dependence on

oil imports would increase in the future.

Exhibit 3: Consumption and gross import of petroleum products in India (million tonnes)

90

95

100

105

110

115

120

125

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

0

2

4

6

8

10

12

14

16

18

Consumption Gross Imports (RHS)

Source: Ministry of Petroleum & Natural Gas, ICICIdirect Research

Aegis is one of the major players in Mumbai with a total storage capacity of 162,000 kl(FY07)

India is likely to become thethird largest energy consumer

in the world by 2030

Offers integrated supply chain services to importers andexporters of liquid oil, chemicals

and petroleum products


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Given the soaring demand for petroleum and petroleum-based products, we

believe there will be a substantial increase in demand for allied services like

shipping, port operations, tankage, road transportation and pipeline logistics.

Capacity expansion of high-margin liquid storage facilityAegis is planning to leverage its expertise in handling liquid products to

become a niche player in professional third party logistics services (3PL) for

handling oil and chemicals. The company intends to expand its business in

other port locations like Kochi, Haldia (Calcutta), Mumbai, and Mangalore over

the next few years.

The liquid division contributed only 20.3% to total revenues in FY07. However,

in terms of operating margins (PBIT margins: 54%), it contributed 72.7% to the

overall PBIT. The company enjoys high margins due to its proximity to the

Mumbai port, large storage facilities which are well connected throughpipelines right from the ports to the storage tanks and further to the clients

refineries.

Aegis intends to aggressively increase its liquid storage capacities to 344,000

kl by the end of FY10. To achieve this, it has adopted a mix of organic as well

as inorganic route.

It acquired Sealord Containers, owned by the Adani Group with a capacity of

75,000 kl, near Trombay in Mumbai. This facility commenced operations in

September 2007. Aegis also acquired Konkan Storage Systems (Kochi) with a

liquid storage capacity of 51,000 kl. This capacity is expected to operational by

March 2008.

Apart from these acquisitions, Aegis has bought a land near the Haldia Port to

develop a green-field liquid terminal. This terminal is likely to have a capacity

of 40,000 kl and will be operational by FY11.

It also intends to increase its current capacities in Trombay by building

additional storage facilities. This facility is likely to have a capacity of 56,000 kl

and will be operational by the first quarter of FY10.

Exhibit 4: Liquid logistics capacity to increase (kl)

0

100000

200000

300000

400000

500000

FY06 FY07 FY08E FY09E FY10E FY11E

Trombay I Trombay I I (Sealord) Kochi Trombay III Haldia Mangalore Source: Company, ICICIdirect Research

Liquid handling capacities setto increase 2.7x over FY07-

FY11E

Aegis to adopt a mix of

organic as well as inorganic route to expand high-marginli uid business


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Gas DivisionUnder this division, Aegis imports, stores and distributes (without any

processing) LPG (liquefied petroleum gas) and propane. It operates a 20,000

tonnes fully-refrigerated LPG terminal with two tanks at Trombay in association

with Hindustan Aegis LPG Bottling Company Ltd. (Hindustan Aegis is a

promoter-owned company that is proposed to be merged with Aegis. The

merger proposal is waiting court approval). The facility is capable of handling

500,000 tonnes annually.

The company imports gas from Saudi Arabia, stores them in tanks and then

distributes it to a variety of industrial customers in the western region. Its

clientele include Mahindra & Mahindra, Tata Steel, Grasim and IPCL. Aegis also

offers gas storage and handling to various LPG bulk suppliers on an open-user

terminal basis. In order to grow its LPG business, the company forayed into

auto gas retailing business in FY06.

Entry into high-growth retail businessWith the increasing thrust on usage of gas in automobiles, industrial and

domestic sectors, the prospects for handling, storing and distributing gas also

appear encouraging. The company is increasing focus towards the gas

division, which accounted for 79.7% of its revenues in FY07. Aegis has set up

a retail network of 24 gas stations through which it sells automotive LPG. It

plans to aggressively increase its retail presence to 150 gas stations by the end

FY10, under the Aegis Autogas brand name.

Exhibit 5: Aggressive roll-out of automotive gas stations

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20

40

60

80

100

120

140

160

FY06 FY07 FY08E FY09E FY10E

Source: Company, ICICIdirect Research

Franchise model to accelerate expansionThe company operates the auto gas business on two models a franchise

based dealer-owned-dealer operated (DODO) model, and a company-owned-

company-operated (COCO) model. Aegis plans to operate 90% of its gas

stations on the DODO model. In the DODO model, the dealer gets a fixed

margin of around 5% (Rs 1.75 per litre) from the company. The dealer has to

invest Rs 40-50 lakh per station. It plans to concentrate in Tier II cities, across 8

states, mainly in southern and western India.

Aegis operates a fully- refrigerated LPG terminalcapable of handling 500,000tonnes annually

A franchise-based modelwould help increase retail

presence without significantincremental investment

Number of retail Autogasstations to increase from 14 inFY07 to 150 by FY10


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Through the predominantly franchise-based model, Aegis can increase its

retail presence without significant incremental investment. The dealers also

benefit from the Aegis brand name and uninterrupted supply of gas.

Low automotive LPG penetration in India offers scope for growthOpportunities in auto gas business are encouraging due to lack of penetration

of LPG as an auto fuel in India. According to Indian Oil, the share of Auto LPG

in the total LPG consumption in India is around 1.7% (180,000 tonne) in FY07,

compared to a world average of 8.3%.

Exhibit 6: Automotive LPG scenario World v/s India 2005 (million tonnes)

World India

Total LPG consumption 215.29 9.98

Auto LPG consumption 17.91 0.08

% of automotive LPG to total LPG consumption 8.30 1.70Source: IOC, ICICIdirect Research

Automotive LPG is fast gaining acceptance as an alternative fuel due to itsenvironmental friendliness and cost efficiency coupled with the governmentsthrust on reducing vehicular pollution.

Exhibit 7: Rising sales of automotive LPG

YearNumber of

LPG stationsSales

(000 tonne) % growthFY04 94 10

FY05 120 35 250FY06 200 95 171FY07 300 180 89

Source: IOC, ICICIdirect Research

With increased availability and awareness of the benefits of using LPG, we

believe demand for LPG as a cleaner fuel will increase and the auto gas

retailing business will form one of the major growth drivers for Aegis.

Exhibit 8: Increasing demand for automotive LPG

8000

9000

10000

11000

12000

13000

FY04 FY05 FY06 FY07

('000tonne)

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('000tonne)

Total LPG Demand Auto LPG Demand (RHS)

Source: Ministry of Petroleum & Natural Gas, LPG Consumption IOC, ICICIdirect Research

Aegis to benefit from the

increasing demand for autoLPG in India

Low penetration of auto LPG in India compared to globalconsumption


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Acquisition of Hindustan Aegis to consolidate the gas business

Aegis intends to acquire Hindustan Aegis LPG (HAL), a company owned by thepromoters. Hindustan Aegis owns 20,000-tonne fully refrigerated LPG terminal

at Trombay, which Aegis currently operates. Apart from offering state-of-the-

art facilities like full containment design LPG storage tanks, the terminal also

has gas detectors, automatic shut off systems and remote control valves.

For the acquisition, Aegis will issue 3.6 million new shares of itself to the

shareholders of Hindustan Aegis at a swap ratio of 1:3, and assume a debt of

Rs 30.64 crore. The shareholders and creditors approval for the merger has

been received on October 29, 2007 and the court approval for the same is

expected before March 31, 2008.

According to the management, the tanks can together handle 500,000 tonnesof gas annually. The acquisition is of strategic importance to increase Aegis as

these will help maintain gas storage capacity, which will then be used to

propel the auto gas retailing business.

Merger of Hindustan Aegis, a group company which ownsthe LPG terminal, willconsolidate Aegiss gas

business


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RISK & CONCERNS

Volatility in LPG pricesAegis imports LPG and propane from Saudi Arabia for its trading and auto gas

businesses. LPG prices have a direct co-relation with crude prices. An increase

in the cost of LPG can affect the companys margins. However, the company

believes the long-term sourcing contracts would shield it from volatility in

prices and also provide assured supplies.

Petrol subsidy may reduce differential with LPG pricesPetrol and diesel are subsidised by the government due to political

considerations. Prices have been kept constant for the last six months despite

the global crude prices rising to all-time highs. If the government continues to

shield the domestic fuel prices, the differential between autogas and petrol

may disappear. This could affect the viability of autogas distributors like Aegis.

Exhibit 9: Trend in domestic petrol and International LPG prices

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(Rsperliter)

Petrol

LPG

Source: Bloomberg, ICICIdirect Research (LPG - Arab Gulf LPG Propane Spot price $/tonneconverted to Rs per liter)

Diversion of domestic LPG to automotive fuelIn India, LPG for domestic purposes is subsidised by the government to make

cooking fuel affordable. However, auto LPG dose not have any subsidy

element and is sold at market prices. Diversion of domestic LPG for

commercial purposes, or for running vehicles, will impact revenues of Autogasplayers like Aegis. LPG is also freely available in most of the cities, which

makes its easy to use as auto fuel. However the use of domestic LPG cylinders

for running cars is not legal. It will take some time before public awareness

increases and growth of autogas dispensing stations will help in reducing the

diversion.

Reducing difference between Petrol and LPG prices mayimpact future viability of retailbusiness

Diversion of subsidiseddomestic cylinders for auto

fuel remains a concern forthe autogas retail business


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FINANCIALS

Exhibit 10: Revenue assumptionsParticulars FY07 FY08E FY09E FY10E

Liquid Division

Revenues (Rs cr) 48.82 64.74 89.28 99.54

Year end Capacity (kl) 162000 237000 288000 344000

Effective Capacity (kl) 162000 212250 288000 316000

Realisation per kl (Rs) 3013 3050 3100 3150

Auto Gas Division

Revenues (Rs cr) 54 182 406

No of operational stations at year end 35 80 150

Volumes per station p.a. (tonne) 600 700 800Realisation per tonne (Rs) 38,000 40,000 40,600Source: ICICIdirect Research

Revenues to grow on back of volume growthRevenues are expected to witness a 43.7% CAGR over FY07-10E on the back

of capacity expansion of liquid division and aggressive roll-out of retail

autogas stations under the gas division. We expect the company to increase

its liquid divisions capacity from 162,000 kl in FY07 to 344,000 kl by FY10E.

Volumes under the gas division are likely to increase from 122,000 tonne in

FY07 to 241,000 tonne by FY10E (25.5% CAGR).

Exhibit 11: Revenues set to surge

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300

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(Rscrore)

Liquid division Gas Storage & trading Autogas


Revenues to surge on backof volume growth


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Net profits to surgeNet profit is expected to grow at a robust 59.7% CAGR over FY07-10E, while

margins are like to inch up from 8.9% in FY07 to 12.29% by FY10E. The

increase in margin is expected on account of increase in the contribution from

high margin liquid logistics business and foray into the autogas retail business.

Exhibit 12: Trend in net profit and NPM

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PAT NPM (RHS)


Net margins to improve on account on increase in high-

margin liquid & retail autogasbusiness


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VALUATIONS

Aegis is one of the major logistics players handling liquid chemicals in India.The company is slated to benefit from the robust growth in the economy, and

the subsequent increase in oil and petroleum consumption. To benefit from

the soaring demand, the company is fast expanding its liquid storage

capacities and its expanding its presence to several ports. It has further

forayed into retailing of automotive LPG through its autogas stations.

Though the stock witnessed a recent run-up, the recent crash has brought

prices to attractive levels. At the current price of Rs 275, the stock trades at

15.03x its FY08E EPS of Rs 18.30 and 9.23x its FY09E EPS of Rs 29.81. On an

EV/EBIDTA basis, the stock is available at 9.92x FY08E earnings and 6.60x

FY09E earnings. We believe that the company is likely benefit from the growth

in Indias energy consumption. We rate the stock an OUTPERFORMER with aprice target of Rs 417, at 14x FY09E earnings.

Exhibit 13: One-year forward rolling P/E Band

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450

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Aug-0

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Dec-0

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SharePrice(Rs)

Source: ICICIdirect Research

22x

18x

14x

10x

Exhibit 14: Peer comparison (Estimates for FY09E)

CompanyPrice(Rs)

Market Cap(Rs cr)

Revenue(Rs cr)

PAT(Rs cr)

EPS(Rs)

P/E(x)

EV /EBITDA

ROE(%)

ROCE(%)

Aegis Logistics 275 448 519 59 29.8 9.2 6.6 30.3 29.0

TCI 120 810 1431 50 6.4 18.8 9.6 13.0 13.1

Gateway Distriparks 110 1016 382 103 8.9 12.4 7.4 14.0 15.2Source: ICICIdirect Research Estimates

Aegis is likely to benefit from the growth in Indiasenergy consumption


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FINANCIAL SUMMARY (Consolidated)

Profit and Loss Account (Rs Crore)


Net Sales 154.50 240.38 356.20 518.61 713.87

Material cost 84.55 169.20 250.45 358.72 486.93

Manufacturing & Operating

expenses 15.33 19.02 13.70 19.00 27.77

Employee cost 7.29 8.43 10.54 13.70 17.81

Selling & Administrative exp 11.52 13.82 22.33 37.44 55.55

Total expenditure 118.68 210.47 297.01 428.86 588.06

EBITDA 35.82 29.91 59.20 89.75 125.81

Other income 5.02 4.07 0.00 0.00 0.00

Depreciation 3.73 3.83 9.88 12.07 14.21

Interest 3.25 4.44 4.51 4.79 4.06

PBT 33.86 25.71 44.81 72.89 107.54

Taxation 5.63 4.16 8.32 13.44 19.78Extraordinary item 1.97 0.00 0.00 0.00 0.00

PAT 30.20 21.55 36.49 59.44 87.76

OPM (%) 23.18 12.44 16.62 17.31 17.62

NPM (%) 19.55 8.96 10.25 11.46 12.29

Shares O/S (Crore) 1.63 1.63 1.99 1.99 1.99

EPS (Rs) 18.52 13.22 18.30 29.81 44.01

Balance Sheet (Rs Crore)

Year to March 31 FY06 FY07 FY08E FY09E FY10ESources of funds

Equity Share Capital 16.31 16.31 19.94 19.94 19.94

Reserves & Surplus 83.40 100.28 126.81 176.28 254.07

Secured Loans 19.48 61.00 67.70 71.90 61.00

Unsecured Loans 6.97 5.70 0.00 0.00 0.00

Deferred Tax Liability 7.26 7.57 7.57 7.57 7.57

Current Liabilities & Provisions 23.94 54.58 83.47 116.71 156.68

Total Liability 157.35 245.44 305.48 392.39 499.25

Application of Funds

Net Block 66.22 108.87 165.49 205.67 242.76

Capital WIP 0.88 45.72 0.00 0.00 0.00

Investments 16.97 3.04 3.04 3.04 3.04

Cash 14.92 22.36 29.06 28.36 41.08

Trade Receivables 22.83 30.71 56.42 80.39 109.22

Loans & Advances 35.52 34.73 51.46 74.93 103.14

Total Asset 157.35 245.44 305.48 392.39 499.25

59.7% CAGR in net profitover FY07-10E

43.7% CAGR in revenue over

FY07-10E

Increase in net block due to acquisition and capacity

expansion


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Cash Flow Statement (Rs Crore)


Opening Cash Balance 13.48 14.92 22.36 29.06 28.36Profit after Tax 30.20 21.55 36.49 59.44 87.76

Misc Expenditure w/off -2.42 0.02 0.00 0.00 0.00

Dividend Paid -2.24 -4.66 -4.77 -9.97 -9.97

Depreciation 3.73 3.83 9.88 12.07 14.21

Provision for deferred tax 0.36 0.31 0.00 0.00 0.00

Cash Flow before WC Changes 29.63 21.05 41.60 61.54 92.00

Net Increase in Current Liabilities 0.24 30.64 23.68 33.24 39.97

Net Increase in Current Assets 13.79 7.09 42.44 47.44 57.05

Cash Flow after WC Changes 16.09 44.60 22.85 47.35 74.92

Purchase of Fixed Assets (4.99) (91.34) (20.78) (52.25) (51.30)

Increase / (Decrease) in Loan Funds -4.20 40.25 1.00 4.20 -10.90

Increase / (Decrease) in Equity Capital 0.11 0.00 3.63 0.00 0.00

Net Change in Cash 7.01 (6.49) 6.70 (0.70) 12.72

Closing Cash Balance 20.49 8.43 29.06 28.36 41.08

Ratio Analysis


EPS (Rs) 18.52 13.22 18.30 29.81 44.01

Book Value (Rs) 5.93 12.63 10.63 8.33 7.16

Enterprise Value (Rs Crore) 459.95 492.76 587.00 591.90 568.29

EV/Sales (x) 2.98 2.05 1.65 1.14 0.80

EV/EBIDTA (x) 12.84 16.47 9.92 6.60 4.52Market Cap to sales (x) 2.90 1.87 1.54 1.06 0.77

Price to Book Value (x) 46.37 21.76 25.88 33.03 38.41

Operating Margin (%) 23.18 12.44 16.62 17.31 17.62

Net Profit Margin (%) 19.55 8.96 10.25 11.46 12.29

RONW (%) 30.29 18.48 24.87 30.29 32.03

ROCE (%) 29.42 16.45 23.00 28.97 33.31

Debt/ Equity (x) 0.27 0.57 0.46 0.37 0.22

Current Ratio 3.06 1.61 1.64 1.57 1.62

Debtors Turnover Ratio 6.77 7.83 6.31 6.45 6.54

Fixed Assets Turnover Ratio 2.33 2.21 2.15 2.52 2.94

Du Pont AnalysisPAT / PBT 0.89 0.84 0.81 0.82 0.82

PBT / EBIT 0.91 0.85 0.91 0.94 0.96

EBIT / Sales 0.24 0.13 0.14 0.15 0.16

Sales / Assets 0.98 0.98 1.17 1.32 1.43

Assets / Equity 1.58 2.11 2.08 2.00 1.82

ROE 30.29 18.48 24.87 30.29 32.03

Equity issued to shareholdersof group company HindustanAegis on account of merger

Stable margins due togrowth in high-margin liquid& retail autogas business

Franchise-based model tohelp increase returns withoutsignificant investment


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ICICIdirect endeavours to provide objective opinions and recommendations. ICICIdirect assigns ratings to itsstocks according to their notional target price vs. current market price and then categorises them asOutperformer, Performer, Hold, and Underperformer. The performance horizon is 2 years unless specified andthe notional target price is defined as the analysts' valuation for a stock.

RATING RATIONALE

Outperformer: 20% or more;Performer: Between 10% and20%;Hold: +10% return;Underperformer: -10% or more.

Harendra Kumar Head - Research & Advisory [email protected]

ICICIdirect Research Desk,

ICICI Securities Limited,

Ground floor, Mafatlal House,163, H.T. Parekh Marg,Backbay Reclamation,Churchgate,Mumbai 400 020

[email protected]

Disclaimer

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered

in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form,without prior written consent of ICICI Securities Ltd (I-Sec). The author of the report does not hold any investment in any of thecompanies mentioned in this report. I-Sec may be holding a small number of shares/position in the above-referred companies as ondate of release of this report. This report is based on information obtained from public sources and sources believed to be reliable, butno independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein issolely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell orsubscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax adviceor a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussedand opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based ontheir own investment objectives, financial positions and needs of specific recipient. This report may not be taken in substitution for theexercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. I-Sec andaffiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is notnecessarily a guide to future performance. Actual results may differ materially from those set forth in projections. I-Sec may haveissued other reports that are inconsistent with and reach different conclusion from the information presented in this report. This reportis 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 I-Sec and affiliates to any registration or licensing requirement within such jurisdiction. The securities describedherein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession thisdocument may come are required to inform themselves of and to observe such restriction.

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