QIB push leads to 2x subscription for Aegis Vopak Terminals IPO; GMP hints a flat listing

The initial public offering (IPO) of Aegis Vopak Terminals managed to sail through during the third and final day of the bidding process, thanks to the institutional push. The issue was booked only six per cent on day one and ended day two with only 17 per cent subscription.

Aegis Vopak Terminals is selling its shares in the price band of Rs 223-235 apiece. Investors can apply for a minimum of 63 shares and its multiples thereafter. It is looking to raise Rs 2,800 crore via IPO, which is entirely a fresh share sale of up to 11,91,48,936 equity shares.

According to the data, the investors made bids for 14,35,59,486 equity shares, or 2.08 times, compared to the 6,90,58,296 equity shares offered for the subscription by 3.45 pm on Wednesday, May 28, 2025. The bidding for the issue, which kicked-off on Monday, May 26, shall conclude today.

The allocation for qualified institutional bidders (QIBs) was subscribed 3.30 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 55 per cent. However, the quota set aside for retail investors was booked 72 per cent as of the same time.

Aegis Vopak Terminals, established in 2013 is set to be listed on June 2, 2025. The company, known for operating storage terminals for liquefied petroleum gas (LPG) and other liquid products. The allocation includes 75% for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for Retail Individual Investors (RIIs), with ICICI Securities and others acting as lead managers.

In the past financial period, Aegis Vopak reported a net profit of Rs 85.89 crore on a revenue of Rs 476.15 crore for the nine months ending December 2024. For the entire fiscal year 2023-24, the company recorded a net profit of Rs 86.54 crore with revenue reaching Rs 570.12 crore, which illustrates its stable financial performance.

The Grey Market Premium (GMP) for Aegis Vopak's shares has seen a reduction, now standing at Re 1 per share. This suggests a flat listing gains for the investors. Despite this correction from a previous GMP of Rs 15, analysts maintain a positive stance due to the company's strong positioning and growth prospects.

Analysts have noted several strengths of Aegis Vopak, including its robust parentage and a wide array of clients. However, they also point out potential risks such as aggressive pricing, regional concentration in West India, and elevated debt levels.

The IPO proceeds the company has indicated to pay-off debt worth Rs 2,016 crore and fund its purchase of cryogenic terminal at New Mangalore port in Karnataka, said Indsec Research. "Given the high valuation vs industry peers and limited operating and financial history, we ascribe 'subscribe for long term' rating to the IPO." 

The company has already raised Rs 1,260 crore from anchor investors through the allocation of 5.36 crore shares, reflecting significant institutional confidence. This capital injection is critical for its expansion strategy.

The IPO has attracted varied levels of interest across different investor categories. Institutional investors' response is pivotal, but retail and non-institutional investors also form an essential part of the subscription profile.

Aegis Vopak operates in a niche and scalable business model of storage terminals of LPG and liquid products at strategic locations. Customer stickiness at 94 per cent reflects long term contracts and stable cash flows, said Nirmal Bang Securities.

"In addition, strong promoter background will aid it to create a strong footfall in the energy and chemicals tailwind industry. However, valuations are expensive at 60x EV/EBIDTA and 258x P/E for annualized FY25 earnings, hence recommend ‘Neutral’ to the issue," it added.

Market experts largely offer a favourable outlook on the IPO, advising potential investors to weigh the associated risks with the opportunities. The company's strategic market positioning and enduring client relationships are highlighted as key factors for potential longer-term returns.

Aegis Vopak's shares are scheduled for listing on June 2, 2025, on both the BSE and NSE. Interested investors are advised to confirm their UPI mandates promptly to avoid any participation issues.