January 30, 2008| Logistics

Initiating coverage
Current price Target price
Aegis Logistics (AEGCHE) Rs 275 Rs 417
Potential upside Time Frame
52% 12 months
Niche player expands scope …
OUTPERFORMER
Aegis Logistics, a leader in oil and gas logistics, is expanding its liquid
storage capacities to ride the soaring demand for oil and petroleum Analysts’ Names
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 Siddhartha Khemka
siddhartha.khemka@icicidirect.com
oil/gas products. The company has also forayed into the auto liquefied
petroleum gas (LPG) business through its Autogas stations. Ember Pereira
ember.pereira@icicidirect.com
ƒ Increasing demand for oil & chemical logistics to boost growth
India is currently the fifth biggest energy consumer in the world and is Sales & EPS trend
expected to become the third largest consumer by 2030. Given the soaring 800 50

demand for petroleum and petroleum-based products, we believe there will 600
40

be a massive demand for logistics services like port operations, tankage, 30

Rs cr
400

Rs
transportation and pipeline logistics. 20
200 10

ƒ Capacity expansion of high-margin liquid storage facility 0 0

FY05 FY06 FY07 FY08E FY09E FY10E
Aegis is a major player in liquid logistics with a strong presence in Mumbai.
Net Sales EPS (RHS)
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,
Stock metrics
Haldia (Kolkata) JNPT and Mangalore. To achieve this, it has adopted a mix
Promoters holding 63.7%
of organic as well as inorganic route. Market Cap Rs 448 crore
52 Week H/L 404 / 111
ƒ Foray into high-growth auto LPG retail business
Sensex 17,222
The company has set up a retail network of 24 gas stations through which it Average volume 43,954
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 Comparative return metrics
will be one of the major growth drivers for Aegis. Stock return 3M 6M 12M
Aegis 62% 81% 62%
Valuations TCI -4% 3% 47%
At the current price of Rs 275, the stock is trading at 15.03x its FY08E EPS of Gateway Distriparks -23% -27% -33%
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 Price trend

Year to March 31 FY06 FY07 FY08E FY09E FY10E
450
Revenue (Rs cr) 154.50 240.38 356.20 518.61 713.87 Target Price
400
Net Profit (Rs cr) 30.20 21.55 36.49 59.44 87.76 350
EPS (Rs) 18.52 13.22 18.30 29.81 44.01
Share Price (Rs)

300
% Growth 172.4% -28.6% 38.5% 62.9% 47.6% 250
Absolute Buy
P/E (x) 14.04 20.81 15.03 9.23 6.25 200
150
Price/Book (x) 43.84 21.76 25.88 33.03 38.41
100
EV/EBIDTA (x) 12.16 16.47 9.92 6.60 4.52
50
NPM (%) 19.55 8.96 10.25 11.46 12.29 0
RoNW (%) 30.29 18.48 24.87 30.29 32.03
Apr-05

Feb-06
Apr-06

Feb-07
Apr-07
Jun-05

Aug-05

Oct-05

Dec-05

Jun-06

Aug-06

Oct-06

Dec-06

Jun-07

Aug-07

Oct-07

Dec-07

RoCE (%) 29.42 16.45 23.00 28.97 33.31

ICICIdirect | Equity Research Source: ICICIdirect Research

1|Page
Company Background Share holding pattern
Share holder % holding
Aegis Logistics was founded in 1956 and started operations as a Promoters 63.71
specialty chemicals manufacturer supplying to the paints Institutional investors 4.50
industry. In 1977, the company diversified into liquid logistics
Other investors 5.76
management when it set up a port terminal in Mumbai to
handle ships carrying cargo of chemicals. The company further General public 26.03
diversified into port handling and storage of oil & petroleum
products, as well as distribution and storage facilities for gases Promoter & Institutional holding trend
such as LPG and propane.
70 63.7 63.7 63.7 63.7
60
Post liberalisation, the company set its sight on the growing 50
logistics business and divested its chemical manufacturing 40

(%)
facilities to concentrate on providing total supply chain 30
management solutions for moving oil, gas and chemicals. 20
10 1.6 2.2 2.2 4.5
An ISO 9001-2000, ISO 14001-1996 & OHSAS 18001 certified 0
Q4FY07 Q1FY08 Q2FY08 Q3FY08
company, Aegis has graduated from being a chemicals
manufacturer to a leading liquid logistics solutions provider in Promoters Institutional investors
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)

Aegis Logistics

Total Revenues: Rs 240.38 crore

Liquid Division Gas Division

20.3% 79.7%

Tank storage and Storage & Trading Auto gas

terminaling

PBIT margins PBIT margins

54.6% 5.2%

Net profit margins

9.0%
Source: Company, ICICIdirect Research

2|Page
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 Offers integrated supply chain
western coast and is in the heartland of India's chemical and petrochemical services to importers and
belt. The terminal has ISO 9001-2000 Quality Management System (QMS) and exporters of liquid oil, chemicals
ISO 14001-1996 Environmental Management System (EMS) certification. 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, Aegis is one of the major
Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum players in Mumbai with a total
Corporation (BPCL). Aegis forms a critical part of the supply chain of HPCL and storage capacity of 162,000 kl
BPCL, which are connected with dedicated pipelines to provide quality logistic (FY07)
support with minimal losses.

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 18
120 16
14
115
12 India is likely to become the
110 10 third largest energy consumer
105 8 in the world by 2030
6
100
4
95 2
90 0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Consumption Gross Imports (RHS)
Source: Ministry of Petroleum & Natural Gas, ICICIdirect Research

3|Page
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 Aegis to adopt a mix of
Mumbai port, large storage facilities which are well connected through organic as well as inorganic
pipelines right from the ports to the storage tanks and further to the client’s route to expand high-margin
refineries. liquid business

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
Liquid handling capacities set
400000
to increase 2.7x over FY07-
FY11E
300000

200000

100000

0
FY06 FY07 FY08E FY09E FY10E FY11E

Trombay I Trombay II (Sealord) Kochi Trombay III Haldia Mangalore

Source: Company, ICICIdirect Research

4|Page
Gas Division
Under this division, Aegis imports, stores and distributes (without any
processing) LPG (liquefied petroleum gas) and propane. It operates a 20,000 Aegis operates a fully-
tonnes fully-refrigerated LPG terminal with two tanks at Trombay in association refrigerated LPG terminal
with Hindustan Aegis LPG Bottling Company Ltd. (Hindustan Aegis is a capable of handling 500,000
promoter-owned company that is proposed to be merged with Aegis. The tonnes annually
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 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 Number of retail Autogas
120 stations to increase from 14 in
FY07 to 150 by FY10
100
80
60
40
20
0
FY06 FY07 FY08E FY09E FY10E

Source: Company, ICICIdirect Research

Franchise model to accelerate expansion

The company operates the auto gas business on two models – a franchise A franchise-based model
based dealer-owned-dealer operated (DODO) model, and a company-owned- would help increase retail
company-operated (COCO) model. Aegis plans to operate 90% of its gas presence without significant
stations on the DODO model. In the DODO model, the dealer gets a fixed incremental investment
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.

5|Page
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)
Low penetration of auto LPG in
World India India compared to global
Total LPG consumption 215.29 9.98 consumption
Auto LPG consumption 17.91 0.08
% of automotive LPG to total LPG consumption 8.30 1.70
Source: IOC, ICICIdirect Research

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) % growth
FY04 94 10
FY05 120 35 250
FY06 200 95 171
FY07 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

13000 400
350 Aegis to benefit from the
12000 increasing demand for auto
300 LPG in India
('000 tonne)

('000 tonne)

11000 250
200
10000 150
100
9000
50
8000 0
FY04 FY05 FY06 FY07
Total LPG Demand Auto LPG Demand (RHS)
Source: Ministry of Petroleum & Natural Gas, LPG Consumption – IOC, ICICIdirect Research

6|Page
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 Merger of Hindustan Aegis, a
at Trombay, which Aegis currently operates. Apart from offering state-of-the- group company which owns
art facilities like full containment design LPG storage tanks, the terminal also the LPG terminal, will
has gas detectors, automatic shut off systems and remote control valves. consolidate Aegis’s gas
business
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.

7|Page
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 Petrol
40 Reducing difference between
(Rs per liter)

Petrol and LPG prices may

30 LPG impact future viability of retail
business
20

10

0
Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

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 Diversion of subsidised
element and is sold at market prices. Diversion of domestic LPG for domestic cylinders for auto
fuel remains a concern for
commercial purposes, or for running vehicles, will impact revenues of Autogas
the autogas retail business
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.

8|Page
FINANCIALS

Exhibit 10: Revenue assumptions

Particulars 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) 600 700 800
Realisation per tonne (Rs) 38,000 40,000 40,600
Source: ICICIdirect Research

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
500 Revenues to surge on back
(Rs crore)

of volume growth
400
300
200
100
0
FY05 FY06 FY07 FY08E FY09E FY10E
Liquid division Gas Storage & trading Autogas
Source: Company, ICICIdirect Research

9|Page
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 20
90 18
80 16
70 14
(Rs crore)

60 12

(%)
50 10
40 8 Net margins to improve on
30 6 account on increase in high-
20 4 margin liquid & retail autogas
10 2 business
0 0
FY05 FY06 FY07 FY08E FY09E FY10E
PAT NPM (RHS)
Source: Company, ICICIdirect Research

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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
Aegis is likely to benefit
the soaring demand, the company is fast expanding its liquid storage from the growth in India’s
capacities and its expanding its presence to several ports. It has further energy consumption
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.

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

450
400
22x
350
Share Price (Rs)

300 18x
250 14x
200
10x
150
100
50
0
Apr-05

Feb-06
Apr-06

Feb-07
Apr-07
Jun-05
Aug-05
Oct-05
Dec-05

Jun-06
Aug-06
Oct-06
Dec-06

Jun-07
Aug-07
Oct-07
Dec-07

Source: ICICIdirect Research

Exhibit 14: Peer comparison (Estimates for FY09E)

Price Market Cap Revenue PAT EPS P/E EV / ROE ROCE
Company (Rs) (Rs cr) (Rs cr) (Rs cr) (Rs) (x) EBITDA (%) (%)
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 15.2
Source: ICICIdirect Research Estimates

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FINANCIAL SUMMARY (Consolidated)
Profit and Loss Account (Rs Crore)
Year to March 31 FY06 FY07 FY08E FY09E FY10E
43.7% CAGR in revenue over
Net Sales 154.50 240.38 356.20 518.61 713.87
FY07-10E
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 19.78
Extraordinary item 1.97 0.00 0.00 0.00 0.00
PAT 30.20 21.55 36.49 59.44 87.76 59.7% CAGR in net profit
OPM (%) 23.18 12.44 16.62 17.31 17.62 over FY07-10E
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 FY10E
Sources 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 Increase in net block due to
Capital WIP 0.88 45.72 0.00 0.00 0.00 acquisition and capacity
Investments 16.97 3.04 3.04 3.04 3.04 expansion
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

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Cash Flow Statement (Rs Crore)
Year to March 31 FY06 FY07 FY08E FY09E FY10E
Opening Cash Balance 13.48 14.92 22.36 29.06 28.36
Profit 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
Equity issued to shareholders
Increase / (Decrease) in Equity Capital 0.11 0.00 3.63 0.00 0.00 of group company – Hindustan
Net Change in Cash 7.01 (6.49) 6.70 (0.70) 12.72 Aegis on account of merger
Closing Cash Balance 20.49 8.43 29.06 28.36 41.08

Ratio Analysis
Year to March 31 FY06 FY07 FY08E FY09E FY10E
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 4.52
Market 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 Stable margins due to
Net Profit Margin (%) 19.55 8.96 10.25 11.46 12.29 growth in high-margin liquid
& retail autogas business
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 Analysis
PAT / 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 Franchise-based model to
Assets / Equity 1.58 2.11 2.08 2.00 1.82 help increase returns without
significant investment
ROE 30.29 18.48 24.87 30.29 32.03

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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 harendra.kumar@icicidirect.com

ICICIdirect Research Desk,

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

research@icicidirect.com

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 the
companies mentioned in this report. I-Sec may be holding a small number of shares/position in the above-referred companies as on
date of release of this report. This report is based on information obtained from public sources and sources believed to be reliable, but
no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is
solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or
subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice
or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed
and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on
their own investment objectives, financial positions and needs of specific recipient. This report may not be taken in substitution for the
exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. I-Sec and
affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not
necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. I-Sec may have
issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. This report
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herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this
document may come are required to inform themselves of and to observe such restriction.

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