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India Ratings & Research revises rating outlook Aegis Vopak Terminals to 'positive'

28-Jun-25 14:17 Hrs IST

The agency has also affirmed the company's short term rating at 'IND A1+'.

India Ratings & Research stated that the 'positive' outlook reflects a likely improvement in the consolidated scale of operations in the near term, led by operationalisation and ramp-up of the newly added and upcoming capacities to meet the rising import/export demand for liquid and liquefied petroleum gas (LPG) in India.

The overall operational liquid capacity and LPG static capacity continue to increase, and presently stand at 1.9 million kilolitre (kl) (FYE24: 1.6 million kl) and 1,99,000 metric tonnes (MT) (1,17,000 MT), respectively.

The company plans to augment its liquid storage capacity by 176,000kl at various locations and its static LPG storage capacity by 48,000MT at Pipavav over FY26-FY27.

Furthermore, it plans to add an ammonia terminal with a static storage capacity of 36,000MT at a capex of around Rs 5.3 billion at Pipavav.

The consolidated EBITDA improved to Rs 11.0 billion in FY25 (FY24: Rs 9.2 billion; FY23: Rs 6.7 billion) and is likely to continue to improve in the medium term, supported by continued ramp-up of the newly added and upcoming capacities.

Furthermore, in June 2025, Aegis Vopak Terminals (AVTL) has successfully raised funds amounting to Rs 28 billion through an initial public offering (IPO), enabling term debt repayment of Rs 20.2 billion.

This has led to a substantial improvement in the capital structure, allowing significant headroom for capacity expansion over the medium term.

India Ratings expects the company to achieve a net cash position in FY26, led by debt repayment and high cash balances.

The company, apart from liquid and LPG capacity additions, is also evaluating opportunities in the ammonia terminal, industrial terminal and alternative energies and the management has envisaged a cumulative capex of Rs 90 billion by FY30 with a step-up in the annual capex run rate.

The agency believes this might lead to debt-funded capex, and hence, the company's net leverage might turn positive again over the medium term. India Ratings notes the precedence of conservative funding strategy for the company's growth investments and the recent fund raise to support the same.

However, the impact of the higher-than-expected capex, acquisitions, newly added capacities utilisation levels and return profile of newer segments such as ammonia terminals on the credit metrics will continue to be a key rating monitorable.

With respect to AVTL's IPO, the promoters, AELL and Vopak, are required to dilute around 12% additional stake as part of the regulation to meet minimum public shareholding requirement within three years of the IPO, and would thereby be able to raise additional equity, leading to lower debt drawdown for the planned capex.

Aegis Vopak Terminals is a JV between AELL and Vopak, a Dutch company that provides storage and logistics solutions for chemicals, oils, gases, LNG and biofuels. The company owns and operates terminalling assets in Pipavav, Haldia, Kandla, Kochi, JNPT and Mangalore.

The scrip rose 0.85% to end at Rs 254.55 on the BSE on Friday.