Jefferies upgrades Aegis Vopak shares to Buy, says correction overdone. Here’s why

Shares of Aegis Vopak Terminals rallied as much as 6% to their day’s high of Rs 203 on the BSE on Wednesday after international brokerage firm Jefferies upgraded the stock to Buy and assigned a fresh target price of Rs 240, implying an upside of 25% from current market levels.

While the brokerage has cut its target price from Rs 255, it believes the recent correction in Aegis Vopak Terminals (AVTL) has been excessive. The stock has fallen 16% since Middle East tensions escalated, compared with an 8% decline in the Nifty. While near-term risks persist, the brokerage expects LPG import volumes to normalise once geopolitical tensions ease.

Jefferies said Aegis remains on track with its expansion plans, with management reiterating an aggregate capex target of $5 billion by FY30 and $1.2 billion by FY27. The company currently operates 1.7 million cubic metres of liquid storage capacity and 225,800 MT of LPG capacity across six ports and aims to expand its presence to 12 ports by 2030.

Capacity additions at JNPT and Kandla ports are progressing as planned and are expected to increase liquid storage capacity by 25% and LPG capacity by 34%, respectively. Management said capacity expansion is being aligned with demand growth. The company is also expanding into ammonia storage, with a 36,000 MT facility under development at Pipavav port. Additionally, the Kandla-Gorakhpur pipeline is expected to be commissioned by September 2026, which could support higher LPG terminal throughput.

“We estimate 4.7% CAGR in LPG demand over FY26-30E, driving 5.3% CAGR in imports. We believe AVTL is also well-placed to capture storage-led growth as the government plans to build an LPG storage reserve to cover 30 days of demand,” the brokerage said in a note.

Jefferies has lowered its FY27 EBITDA estimate for Aegis Vopak Terminals (AVTL) by 22% to factor in the March 2026 quarter miss and the impact of Middle East tensions. However, it has largely retained its FY28 estimates, assuming geopolitical tensions ease over time.

The brokerage has cut its target price to Rs 240 from Rs 255 earlier. The valuation is based on 22x March 2028 estimated EV/EBITDA, compared with 18x for JSW Infrastructure. Jefferies expects AVTL to deliver a 33% EBITDA CAGR between FY28 and FY30, versus 21% for JSW Infrastructure, while achieving broadly similar return ratios by FY28.Key downside risks highlighted by the brokerage include delays in the Kandla-Gorakhpur pipeline project, weaker-than-expected LPG imports or market share gains, and value-dilutive capacity expansion plans.

Aegis Vopak shares are down 20% since the beginning of the year.

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