January 30, 2008| Logistics

Initiating coverage

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.

Current price Rs 275 Potential upside 52%

Target price Rs 417 Time Frame 12 months

OUTPERFORMER
Analysts’ Names

Siddhartha Khemka Ember Pereira

siddhartha.khemka@icicidirect.com ember.pereira@icicidirect.com Sales & EPS trend
800 600 Rs cr 400 200 0 FY05 FY06 FY07 Net Sales FY08E FY09E FY10E EPS (RHS) 50 40 30 20 10 0 Rs

Increasing demand for oil & chemical logistics to boost growth
India 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 facility
Aegis 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 business
The 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.

Stock metrics Promoters holding Market Cap 52 Week H/L Sensex Average volume Comparative return metrics Stock return 3M Aegis 62% TCI -4% Gateway Distriparks -23%

63.7% Rs 448 crore 404 / 111 17,222 43,954

Valuations
At 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 India’s 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 Revenue (Rs cr) Net Profit (Rs cr) EPS (Rs) % Growth P/E (x) Price/Book (x) EV/EBIDTA (x) NPM (%) RoNW (%) RoCE (%) 154.50 30.20 18.52 172.4% 14.04 43.84 12.16 19.55 30.29 29.42

6M 81% 3% -27%

12M 62% 47% -33%

Price trend FY07 240.38 21.55 13.22 -28.6% 20.81 21.76 16.47 8.96 18.48 16.45 FY08E 356.20 36.49 18.30 38.5% 15.03 25.88 9.92 10.25 24.87 23.00 FY09E 518.61 59.44 29.81 62.9% 9.23 33.03 6.60 11.46 30.29 28.97 FY10E 713.87 87.76 44.01 47.6% 6.25 38.41 4.52 12.29 32.03 33.31
450 400 350 Share Price (Rs) 300 250 200 150 100 50 0 Apr-05 Apr-06 Jun-05 Aug-05 Jun-06 Aug-06 Apr-07 Feb-06 Feb-07 Jun-07 Aug-07 Oct-05 Oct-06 Dec-05 Dec-06 Oct-07 Dec-07

Target Price

Absolute Buy

ICICIdirect | Equity Research

Source: ICICIdirect Research

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Company Background
Aegis Logistics was founded in 1956 and started operations as a specialty chemicals manufacturer supplying to the paints industry. In 1977, the company diversified into liquid logistics management when it set up a port terminal in Mumbai to handle ships carrying cargo of chemicals. The company further diversified into port handling and storage of oil & petroleum products, as well as distribution and storage facilities for gases such as LPG and propane. Post liberalisation, the company set its sight on the growing logistics business and divested its chemical manufacturing facilities to concentrate on providing total supply chain management solutions for moving oil, gas and chemicals. An ISO 9001-2000, ISO 14001-1996 & OHSAS 18001 certified company, Aegis has graduated from being a chemicals manufacturer to a leading liquid logistics solutions provider in India. With rising oil prices, the company identified the underlying potential in the LPG retailing business and is now increasingly shifting its focus towards the gas division, which accounted for 79.7% of its revenues in FY07. In order to grow its LPG business, the company entered the Auto gas retailing business in FY06. Exhibit 2: Revenue Model – Standalone (FY07)

Share holding pattern Share holder Promoters Institutional investors Other investors General public Promoter & Institutional holding trend
70 60 50 40 30 20 10 0 63.7 63.7 63.7

% holding 63.71 4.50 5.76 26.03

63.7

(%)

1.6 Q4FY07

2.2 Q1FY08 Promoters

2.2 Q2FY08 Institutional investors

4.5 Q3FY08

Aegis Logistics
Total Revenues: Rs 240.38 crore

Liquid Division 20.3% Tank storage and terminaling

Gas Division 79.7%

Storage & Trading

Auto gas

PBIT margins 54.6%

PBIT margins 5.2%

Net profit margins 9.0%
Source: Company, ICICIdirect Research

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INVESTMENT RATIONALE Liquid Division
Aegis provides logistics to importers and exporters of liquid oil, chemicals and petroleum products. It operates a terminal at Trombay which is connected to three 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.

Offers integrated supply chain services to importers and exporters of liquid oil, chemicals and petroleum products

Major player in Mumbai
Aegis 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 company’s 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.

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

Increasing demand for oil & chemical logistics to boost growth
India 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)
125 120 115 110 105 100 95 90 2000-01 2001-02 2002-03 Consumption 2003-04 2004-05 2005-06 2006-07 Gross Imports (RHS) 18 16 14 12 10 8 6 4 2 0

India is likely to become the third largest energy consumer in the world by 2030

Source: Ministry of Petroleum & Natural Gas, ICICIdirect Research

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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 facility
Aegis 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 through pipelines right from the ports to the storage tanks and further to the client’s 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)
500000 400000 300000 200000 100000 0 FY06 Trombay I FY07 FY08E Kochi FY09E Trombay III FY10E Haldia FY11E Mangalore

Aegis to adopt a mix of organic as well as inorganic route to expand high-margin liquid business

Liquid handling capacities set to increase 2.7x over FY07FY11E

Trombay II (Sealord)

Source: Company, ICICIdirect Research

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Gas Division
Under 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. Aegis operates a fullyrefrigerated LPG terminal capable of handling 500,000 tonnes annually

Entry into high-growth retail business
With 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
160 140 120 100 80 60 40 20 0 FY06 FY07 FY08E FY09E FY10E

Number of retail Autogas stations to increase from 14 in FY07 to 150 by FY10

Source: Company, ICICIdirect Research

Franchise model to accelerate expansion
The company operates the auto gas business on two models – a franchise based dealer-owned-dealer operated (DODO) model, and a company-ownedcompany-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. A franchise-based model would help increase retail presence without significant incremental investment

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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 growth
Opportunities 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 1.70
Source: IOC, ICICIdirect Research

Low penetration of auto LPG in India compared to global consumption

Automotive LPG is fast gaining acceptance as an alternative fuel due to its environmental friendliness and cost efficiency coupled with the government’s thrust on reducing vehicular pollution. Exhibit 7: Rising sales of automotive LPG Number of Sales Year LPG stations (‘000 tonne) FY04 94 10 FY05 120 35 FY06 200 95 FY07 300 180
Source: IOC, ICICIdirect Research

% growth 250 171 89

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
13000 12000 ('000 tonne) 11000 10000 9000 8000 FY04 FY05 Total LPG Demand FY06 FY07 Auto LPG Demand (RHS) 400 350 300 250 200 150 100 50 0 ('000 tonne)

Aegis to benefit from the increasing demand for auto LPG in India

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

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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 the promoters. Hindustan Aegis owns 20,000-tonne fully refrigerated LPG terminal at Trombay, which Aegis currently operates. Apart from offering state-of-theart 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 tonnes of 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 owns the LPG terminal, will consolidate Aegis’s gas business

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RISK & CONCERNS
Volatility in LPG prices
Aegis 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 company’s 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 prices
Petrol 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
60 50 (Rs per liter) 40 30 20 10 0 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jul-07 Jan-08 LPG Petrol

Reducing difference between Petrol and LPG prices may impact future viability of retail business

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

Diversion of domestic LPG to automotive fuel
In 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 Autogas players 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. Diversion of subsidised domestic cylinders for auto fuel remains a concern for the autogas retail business

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FINANCIALS
Exhibit 10: Revenue assumptions Particulars Liquid Division Revenues (Rs cr) Year end Capacity (kl) Effective Capacity (kl) Realisation per kl (Rs) Auto Gas Division Revenues (Rs cr) No of operational stations at year end Volumes per station p.a. (tonne) Realisation per tonne (Rs)
Source: ICICIdirect Research

FY07 48.82 162000 162000 3013

FY08E 64.74 237000 212250 3050

FY09E 89.28 288000 288000 3100

FY10E 99.54 344000 316000 3150

54 35 600 38,000

182 80 700 40,000

406 150 800 40,600

Revenues to grow on back of volume growth
Revenues 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 division’s 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

800 700 600 (Rs crore) 500 400 300 200 100 0 FY05 FY06 FY07 FY08E FY09E
Autogas

Revenues to surge on back of volume growth

FY10E

Liquid division
Source: Company, ICICIdirect Research

Gas Storage & trading

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Net profits to surge
Net 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
100 90 80 70 60 50 40 30 20 10 0 FY05 FY06 FY07 PAT
Source: Company, ICICIdirect Research

20 18 16 14 12 10 8 6 4 2 0 FY08E NPM (RHS) FY09E FY10E

(Rs crore)

(%)

Net margins to improve on account on increase in highmargin liquid & retail autogas business

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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 India’s energy consumption. We rate the stock an OUTPERFORMER with a price target of Rs 417, at 14x FY09E earnings.

Aegis is likely to benefit from the growth in India’s energy consumption

Exhibit 13: One-year forward rolling P/E Band
450 400 350 Share Price (Rs) 300 250 200 150 100 50 0 Apr-05 Apr-06 Jun-05 Aug-05 Jun-06 Apr-07 Feb-06 Feb-07 Aug-06 Jun-07 Aug-07 Oct-05 Dec-05 Oct-06 Dec-06 Oct-07 Dec-07

22x 18x 14x 10x

Source: ICICIdirect Research

Exhibit 14: Peer comparison (Estimates for FY09E) PAT Price Market Cap Revenue (Rs) (Rs cr) (Rs cr) (Rs cr) Company Aegis Logistics 275 448 519 59 TCI 120 810 1431 50 Gateway Distriparks 110 1016 382 103
Source: ICICIdirect Research Estimates

EPS (Rs) 29.8 6.4 8.9

P/E EV / (x) EBITDA 9.2 6.6 18.8 9.6 12.4 7.4

ROE ROCE (%) (%) 30.3 29.0 13.0 13.1 14.0 15.2

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FINANCIAL SUMMARY (Consolidated)
Profit and Loss Account Year to March 31 Net Sales Material cost Manufacturing & Operating expenses Employee cost Selling & Administrative exp Total expenditure EBITDA Other income Depreciation Interest PBT Taxation Extraordinary item PAT OPM (%) NPM (%) Shares O/S (Crore) EPS (Rs) FY06 154.50 84.55 15.33 7.29 11.52 118.68 35.82 5.02 3.73 3.25 33.86 5.63 1.97 30.20 23.18 19.55 1.63 18.52 FY07 240.38 169.20 19.02 8.43 13.82 210.47 29.91 4.07 3.83 4.44 25.71 4.16 0.00 21.55 12.44 8.96 1.63 13.22 FY08E 356.20 250.45 13.70 10.54 22.33 297.01 59.20 0.00 9.88 4.51 44.81 8.32 0.00 36.49 16.62 10.25 1.99 18.30 (Rs Crore) FY09E FY10E 518.61 713.87 358.72 486.93 19.00 13.70 37.44 428.86 89.75 0.00 12.07 4.79 72.89 13.44 0.00 59.44 17.31 11.46 1.99 29.81 27.77 17.81 55.55 588.06 125.81 0.00 14.21 4.06 107.54 19.78 0.00 87.76 17.62 12.29 1.99 44.01 43.7% CAGR in revenue over FY07-10E

59.7% CAGR in net profit over FY07-10E

Balance Sheet Year to March 31 Sources of funds Equity Share Capital Reserves & Surplus Secured Loans Unsecured Loans Deferred Tax Liability Current Liabilities & Provisions Total Liability Application of Funds Net Block Capital WIP Investments Cash Trade Receivables Loans & Advances Total Asset

FY06 16.31 83.40 19.48 6.97 7.26 23.94 157.35 66.22 0.88 16.97 14.92 22.83 35.52 157.35

FY07 16.31 100.28 61.00 5.70 7.57 54.58 245.44 108.87 45.72 3.04 22.36 30.71 34.73 245.44

FY08E 19.94 126.81 67.70 0.00 7.57 83.47 305.48 165.49 0.00 3.04 29.06 56.42 51.46 305.48

FY09E 19.94 176.28 71.90 0.00 7.57 116.71 392.39 205.67 0.00 3.04 28.36 80.39 74.93 392.39

(Rs Crore) FY10E 19.94 254.07 61.00 0.00 7.57 156.68 499.25 242.76 0.00 3.04 41.08 109.22 103.14 499.25 Increase in net block due to acquisition and capacity expansion

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Cash Flow Statement Year to March 31 Opening Cash Balance Profit after Tax Misc Expenditure w/off Dividend Paid Depreciation Provision for deferred tax Cash Flow before WC Changes Net Increase in Current Liabilities Net Increase in Current Assets Cash Flow after WC Changes Purchase of Fixed Assets Increase / (Decrease) in Loan Funds Increase / (Decrease) in Equity Capital Net Change in Cash Closing Cash Balance

FY06 13.48 30.20 -2.42 -2.24 3.73 0.36 29.63 0.24 13.79 16.09 (4.99) -4.20 0.11 7.01 20.49

FY07 14.92 21.55 0.02 -4.66 3.83 0.31 21.05 30.64 7.09 44.60 (91.34) 40.25 0.00 (6.49) 8.43

FY08E 22.36 36.49 0.00 -4.77 9.88 0.00 41.60 23.68 42.44 22.85 (20.78) 1.00 3.63 6.70 29.06

FY09E 29.06 59.44 0.00 -9.97 12.07 0.00 61.54 33.24 47.44 47.35 (52.25) 4.20 0.00 (0.70) 28.36

(Rs Crore) FY10E 28.36 87.76 0.00 -9.97 14.21 0.00 92.00 39.97 57.05 74.92 (51.30) -10.90 0.00 12.72 41.08

Equity issued to shareholders of group company – Hindustan Aegis on account of merger

Ratio Analysis Year to March 31 EPS (Rs) Book Value (Rs) Enterprise Value (Rs Crore) EV/Sales (x) EV/EBIDTA (x) Market Cap to sales (x) Price to Book Value (x) Operating Margin (%) Net Profit Margin (%) RONW (%) ROCE (%) Debt/ Equity (x) Current Ratio Debtors Turnover Ratio Fixed Assets Turnover Ratio Du Pont Analysis PAT / PBT PBT / EBIT EBIT / Sales Sales / Assets Assets / Equity ROE

FY06 18.52 5.93 459.95 2.98 12.84 2.90 46.37 23.18 19.55 30.29 29.42 0.27 3.06 6.77 2.33

FY07 13.22 12.63 492.76 2.05 16.47 1.87 21.76 12.44 8.96 18.48 16.45 0.57 1.61 7.83 2.21

FY08E 18.30 10.63 587.00 1.65 9.92 1.54 25.88 16.62 10.25 24.87 23.00 0.46 1.64 6.31 2.15

FY09E 29.81 8.33 591.90 1.14 6.60 1.06 33.03 17.31 11.46 30.29 28.97 0.37 1.57 6.45 2.52

FY10E 44.01 7.16 568.29 0.80 4.52 0.77 38.41 17.62 12.29 32.03 33.31 0.22 1.62 6.54 2.94

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

0.89 0.91 0.24 0.98 1.58 30.29

0.84 0.85 0.13 0.98 2.11 18.48

0.81 0.91 0.14 1.17 2.08 24.87

0.82 0.94 0.15 1.32 2.00 30.29

0.82 0.96 0.16 1.43 1.82 32.03

Franchise-based model to help increase returns without significant investment

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RATING RATIONALE ICICIdirect endeavours to provide objective opinions and recommendations. ICICIdirect assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Outperformer, Performer, Hold, and Underperformer. The performance horizon is 2 years unless specified and the notional target price is defined as the analysts' valuation for a stock. Outperformer: 20% or more; Performer: Between 10% and 20%; Hold: +10% return; Underperformer: -10% or more.

Harendra Kumar

Head - Research & Advisory ICICIdirect Research Desk, ICICI Securities Limited, Ground floor, Mafatlal House, 163, H.T. Parekh Marg, Backbay Reclamation, Churchgate, Mumbai – 400 020 research@icicidirect.com

harendra.kumar@icicidirect.com

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