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Weak liquid division performance drives miss

* In 1QFY26, AEGIS reported EBITDA of INR2.4b, missing our estimate by 14% as normalized EBITDA of Liquid division came in 33% below our estimate, while that of gas division stood 11% above estimates. Management has reiterated its PAT guidance of 25% CAGR over the next few years, primarily led by robust upcoming capacities.

* We estimate a 13% CAGR in EPS over FY25-27E. However, the current valuations at FY27E PE of 29.6x and PB of 4.4x (FY27 ROE: 15.7%) are expensive. Hence, we maintain our Neutral rating on the stock with a TP of INR725, based on 30x FY27E EPS of INR24.1.

Miss led by lower-than-estimated EBITDA margin

* 1QFY26 revenue stood in line with expectations at INR17.2b, while EBITDA missed estimate by 14%, coming in at INR2.4b.

* EBITDA margin stood 1.8% below our estimates at 14% (1QFY25 margins: 14.5%).

* APAT came in at INR1.3b, 12% below our estimate.

* In 1QFY26, standalone revenue stood at INR8.4b (+14% YoY, -8% QoQ).

* Standalone PAT came in at INR0.7b (-58% YoY, -69% QoQ).

* During the quarter, Aegis Vopak Terminals Ltd. (AVTL), a subsidiary, completed its IPO of 119.1m equity shares at INR235/sh, raising INR28b. Post listing, Aegis Logistics’ stake reduced from 50.10% to 44.71%. Despite the dilution, Aegis Logistics retains control, and AVTL remains a consolidated subsidiary

Segmental performance

* Liquids division revenue was INR1.4b (flat YoY, -40% QoQ), and EBIT was INR0.8b (-6% YoY, -54% QoQ).

* Gas division revenue stood at INR15.8b (+8% YoY, +8%QoQ), and EBIT was INR1.3b (flat YoY, -38% QoQ).

Valuation and view: Maintain Neutral

* AEGIS has reiterated its ambitious capex plan for: 1) the commissioning of 125,000 kl liquid capacity at Mumbai port, partially in both FY26/27 (INR2.5b); 2) additional liquid, LPG and LPG bottling capacity at JNPA (INR16.8b); 3) 94cbm LPG capacity at Kandla in FY27; 4) ammonia terminals at Kandla, and 5) 36,000 mt of ammonia capacity at Pipavav by 1QFY27.

* While we estimate a 13% CAGR in EPS over FY25-27E, we believe that the current valuations at 29.6x FY27E EPS already factor in the strong expansion in capacity and earnings. We value the stock at 30x FY27E EPS of INR24.1 to arrive at our TP of INR725. We maintain our Neutral rating on the stock.

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