Neutral Aegis Logistics Ltd for the Target Rs.1,333 by Motilal Oswal Financial Services Ltd
From domestic leader to global contender
* Aegis Logistics’ proposed acquisition of an 89.8% stake in Tristar for USD809m marks a transformational step in its evolution from a domestic LPG and liquid logistics player to a global energy logistics platform. Operating across 30+ countries, Tristar provides Aegis with immediate scale, geographic diversification and access to complementary businesses across maritime logistics, fuel storage, distribution and aviatin fueling. Tristar reported USD1.4b in revenue, USD257m in EBITDA and USD82m in PAT in CY25.
* The transaction implies an enterprise value of USD1.5b for Tristar (~6x CY25 EBITDA; Aegis trades at 26x FY28E EBITDA), with potential operational synergies and a larger earnings base offering scope for long-term value creation. However, integration risks, cash-flow conversion and sustaining profitability amid recent margin pressure remain key monitorables.
* The stock has run up significantly in recent months, primarily driven by the strength in the LPG distribution segment’s margin. While we are constructive about the growth outlook on the back of capacity addition and utilization improvement, valuations are not inexpensive. We have not factored in the proposed acquisition into our estimates and we maintain our LPG distribution EBITDA/mt assumptions at INR6,000/INR5,000 for FY27/FY28. We reiterate our Neutral rating with a TP of INR1,333, based on 36x FY28E EPS of INR37
Tristar deal implies ~6x CY25 EBITDA
* Aegis, through its wholly owned step-down subsidiary Aegis Logistics International Pte, has entered into a definitive agreement to acquire an 89.8% stake in Tristar Holdings from Agility Tristar Holdings, Gulf Investment Corporation and Diamond Holdings for an equity consideration of USD809m, including contingent consideration and interest on deferred payments. The transaction is subject to applicable regulatory approvals and customary closing conditions and is expected to be completed in 4QFY27.
* The transaction implies an enterprise value of USD1.5b at ~6x CY25 EBITDA. Based on Agility’s transaction disclosures, the deal implies an enterprise value of USD1.5b and an equity value of USD882m, translating into 6x CY25 EBITDA.
Potential operational synergies on the cards
* The acquisition could enable cross-selling across Aegis' domestic infrastructure and Tristar's global network, expand access to blue-chip customers and create opportunities for procurement efficiencies and improved asset utilization. The combined platform could also offer integrated logistics solutions across storage, transportation and fuel distribution, supporting international expansion and long-term growth.
* However, the extent and timing of these synergies remain uncertain, and their realization will depend on integration execution and the ability to translate the expanded operating footprint into incremental earnings and cash flows.
Tristar: An integrated energy logistics platform across 30+ countries
* Established in 1998 and headquartered in Dubai, Tristar provides end-to-end liquid logistics solutions across maritime transportation, road transport, fuel storage, fuel distribution and aviation fueling. Its diversified operating platform spans the Middle East, Africa, Asia-Pacific, Europe and the Americas.
* Tristar's maritime operations support the transportation of petroleum products and chemicals, while its road transportation and fuel distribution businesses serve industrial and energy customers across multiple geographies. Its infrastructure portfolio includes fuel storage facilities and airport fueling infrastructure, providing capabilities across the energy supply chain. Tristar has also expanded into retail fuel distribution in Sri Lanka, where it increased its ownership to 95% in 2025, and commissioned new airport fuel infrastructure in East Africa.
* These capabilities complement Aegis' existing Indian operations across LPG, liquid storage and distribution, providing an established platform to expand its international presence.
Valuation and view
* The stock has run up significantly in recent months, primarily driven by the strength in the LPG distribution segment’s margin. While we are constructive about the company’s growth outlook on the back of capacity addition and utilization improvement, valuations are not inexpensive.
* We estimate a 20% CAGR in PAT over FY26-28E; however, we believe current valuations at 40x FY28E EPS already factor in the strong expansion in capacity and earnings. We have not factored in the proposed acquisition into our estimates and we maintain our LPG distribution EBITDA/mt assumptions at INR6,000/INR5,000 for FY27/FY28. We reiterate our Neutral rating on the stock with a TP of INR1,333, based on 36x FY28E EPS of INR37.
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