Aegis Vopak Terminals IPO opens today: Should you subscribe to it?

The initial public offering (IPO) on Aegis Vopak Terminals shall open for bidding on Monday, May 26. The liquid products terminal owner is offering its shares in the range of Rs 223-235 apiece for which investors can apply for a minimum of 63 equity shares and its multiples thereafter. The company issue shall close for bidding on Wednesday, May 28.

Aegis Vopak is looking to raise a total of Rs 2,800 crore via IPO, which is entirely an offer-for-sale (OFS) of up to 11,91,48,936 equity shares. The net profit from the issue shall be utilized towards repayment or prepayment of certain outstanding borrowings, funding capital expenditure towards acquisitions; and general corporate purposes.

Incorporated in 2013, Aegis Vopak Terminals (AVTL) is a company that owns and operates storage terminals for liquefied petroleum gas (LPG) and various liquid products. It provides safe storage and related infrastructure for products like petroleum, vegetable oils, lubricants, chemicals, and gases such as propane and butane.

Aegis Vopak manages a total storage capacity of around 1.50 million cubic meters for liquid products and 70,800 metric tons (MT) for LPG as of June 30, 2024. The company operates two LPG storage terminals and 16 liquid storage terminals located across five major ports in India. These terminals handle coastal shipping, imports, and exports.

Aegis Vopak mobilised Rs 1,260 crore from anchor investors as it allocated 5.36 crore shares at a price of Rs 235 apiece. Its anchor book included names like SmallCap World Fund, American Funds, Aberdeen, Government Pension Fund Global, Nomura Trust, Tocu Europe, Goldman Sachs, HDFC Mutual Fund, 360ONE Special Opportunities Fund, Bandhan Mutual Fund and more.

For the nine-months ended on December 31, 2024, Aegis Vopak reported a net profit of Rs 85.89 crore with a revenue of Rs 476.15 crore. The company clocked a net profit of Rs 86.54 crore with a revenue of Rs 570.12 crore for the financial year 2023-24.  Aegis Vopak Terminals shall command a market capitalization of IPO is Rs 26,737.80 crore.

Aegis Vopak has reserved 75 per cent of the net issue for the qualified institutional bidders (QIBs), while non-instructional investors (NIIs) will have 15 per cent of the allocation in the issue. Retail investors will have 10 per cent for the allocation in this IPO.

ICICI Securities, BNP Paribas, IIFL Securities, Jefferies India, HDFC Bank are the book running lead managers of the Aegis Vopak Terminals IPO, while MUFG Intime India (Link Intime) is the registrar for the issue. Shares of the company shall be listed on Monday, June 2 on both BSE and NSE. Shares of the company shall be listed on both BSE and NSE. Here's what a host of brokerage firm said about the IPO of Aegis Vopak:

Arihant Capital Markets
Rating: Subscribe
Aegis Vopak is set to grow in India’s energy logistics market, with steady demand for LPG and liquid storage. Its expansion plans, adding 176k m3 of liquid storage and 130k tons of LPG capacity by FY26, plus future green ammonia projects, promise solid growth, said Arihant Capital. "It handles 23 per cent of India’s liquid imports and 61 per cent of LPG imports. We suggest 'subscribe' rating," he said.

SBI Securities
Rating: Subscribe with caution
The business model of Aegis Vopak is capex driven and its core competency is to maintain the storage of gas and high value products at desired properties. Its ongoing capex is fully funded and the repayment of debt to the tune of Rs 2,016 crore should help boost the profitability going ahead. Aegis Vopak being the largest player by capacity could be a key beneficiary of industry tailwinds, said SBI Securities.

"As the new capacities commercialize during FY26, the company has potential to report robust growth during the FY25E-FY27E period. The company is valued at EV/Ebitda and EV/sales multiple of 56.5 times and 41.6 times respectively based on its 9MFY25 annualized earnings. Long-term investors with high-risk appetite may 'subscribe' to the issue," it added.

Aditya Birla Money
Rating: Subscribe for long-term
Aegis Vopak plans to raise Rs 2,800 crore with objective of loan repayment of Rs 2,016 crore and balance for funding expansion capex. Rhe issue is priced at a 57 times FY25 EV/EBITDA. The aggressive expansion and strong parentage instil confidence in the company, we recommend 'subscribe for long-term' rating to the issue.

BP Equities
Rating: Subscribe
Aegis Vopak's asset-heavy model and predictable cash flows from storage contracts provide visibility in earnings, making it well positioned for future growth, said BP Equities. "The issue is valued at a P/E of 198 times on the upper price band based on FY25 earnings. Therefore, we recommend a 'subscribe' rating for the issue," it said.

Ventura Securities
Rating: Subscribe
The IPO proceeds will significantly improve the company’s cash flow by lowering leverage and supporting capacity expansion. Enhanced cash flows are expected to underpin future investments, including the development of green ammonia storage facilities at existing terminals, aligning with the government’s target of million tons of green hydrogen production by 2030, said Ventura.

"The IPO is priced at a TTM P/E of 187.7 times. While this valuation appears steep, the company’s ongoing LPG capacity expansion and planned future ventures into green ammonia present substantial long-term growth potential. We therefore recommend 'subscribe' to this IPO," it added.

Canara Bank Securities
Rating: Neutral
Aegis Vopak can significantly influence the revenue by changing the product mix and has already done extensive capex for which the operating leverage has started to show its effect as the Ebitda margin has expanded from 71 per cent in FY 24 to 74 per cent in 9MFY25, said Canara Bank Securities.

"Although the company does have various levers in its favor due to valuation concerns, we recommend a 'neutral' rating for the IPO. Investors with a long-term perspective may consider the opportunity, based on individual analysis," it added.

Bajaj Broking
Rating: Subscribe for long-term
Aegis Vopak's strategic importance in India’s LPG and liquid bulk infrastructure space justifies a premium to some extent, the pricing seems to factor in strong future growth expectations, said Bajaj Broking. "Investors should view this IPO as a play on long-term infrastructure and energy logistics growth, but must weigh the premium valuation against Its limited historical profitability and execution risks in upcoming capex projects," it said with a 'subscribe for long-term' tag.