Aegis Vopak Terminals plans Rs 2,800 crore IPO to reduce debt and expand operations
The company does not have any pure-play listed peer. Its valuation looks skewed given its growth phase and the impact of interest outgo on net profit.
Aegis Vopak Terminals is set to raise ₹2,800 crore through equity. The funds will be used to repay debt and expand operations. The IPO will dilute promoter holdings. Recent financials show strong revenue and profit growth. Expansion plans at Mangalore and Pipavav ports are underway. The company's valuation is currently high but expected to normalize after debt repayment.
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ET Intelligence Group: Aegis Vopak Terminals (AVTL), which operates liquid and gas storage tank terminals across major ports in India, plans to raise ₹2,800 crore through fresh equity to repay debt and to fund capital expenditure. AVTL is a joint venture between Aegis Logistics , which owns 50.1%, and the Netherlands-based Vopak, which holds 47.4%. After the IPO , the promoter group holding will fall to nearly 87% from the current 97.4%.A higher interest outgo impacted net profit of the company in the past. This will change for the better once it repays debt by using the IPO proceeds worth ₹2,015.9 crore. The utilisation of the existing capacities is likely to improve as the number of customers increases. In addition, it is in the process of expanding terminal capacity across ports, which is expected to improve future profit.These factors indicate a high growth potential even though the financial performance in the past three years may look subdued. Given these factors, investors with a higher risk appetite may consider the IPO for the long term.Established in 2022, the company is the country's largest third-party owner and operator of storage tanks with 70,800 tonnes of capacity for liquified petroleum gas (LPG) and 1.5 million cubic meters for liquid products such as petroleum, vegetable oil, lubricant and other chemicals as of December 2024. It operates 20 tank terminals at six ports including Kandla, Pipavav, JNPT, Mangalore, Kochi, and Haldia. Once the new capacities at Mangalore port and Pipavav port become operational, the LPG capacity will increase to 200,800 tonnes.For AVTL, FY23 was the first full year of operations. In FY24, revenue increased by 59% year-on-year to ₹561.8 crore. Net profit was ₹86.5 crore compared with a net loss of ₹0.8 crore.The operating margin before depreciation and amortisation (Ebitda margin) improved by 590 basis points to 70.8%. In the nine months to December 2024, revenue rose by 23.6% year-on-year to ₹464.1 crore while net profit grew by 154.9% to ₹85.9 crore. The Ebitda margin expanded by 650 basis points to 73.6%. Net debt reduced to ₹1,717.4 crore from ₹2,301.4 crore in December 2023.The company does not have any pure-play listed peer. Its valuation looks skewed given its growth phase and the impact of interest outgo on net profit.In FY24, interest formed 59% of operating margin. Once the debt is repaid, the valuation is expected to normalise. At the upper end of the price band, the company's enterprise value (EV) is 49 times Ebitda. The average multiple for the port sector is at around 26.
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