Aegis Logistics shares rise 3% as JM Financial sees potential in Tristar acquisition

Aegis Logistics Ltd shares rose 3% on Monday as JM Financial analysed the potential acquisition of Tristar, a Dubai-based energy logistics company, noting that the deal could strengthen Aegis Logistics' liquid logistics business and create opportunities for further growth. The brokerage retained its Buy rating on the stock, with an unchanged target price of Rs 1,610.

Media reports suggest that Aegis Logistics is in discussions to acquire Tristar, although a definitive agreement has not been finalised. JM Financial noted that the company has neither confirmed nor denied the reports and analysed a hypothetical all-cash acquisition scenario.

Aegis Logistics shares touched a high of Rs 1,427.30 in the current session, up 2.82% from the previous close of Rs 1,388.10, after opening at Rs 1,399.35.

Tristar acquisition could strengthen liquid logistics business

JM Financial estimates that Tristar could be valued at around $1.5 billion, implying an enterprise value-to-EBITDA multiple of 5.8 times based on its CY25 earnings. The brokerage said the transaction could be significantly earnings-accretive for Aegis Logistics if it materialises.

Tristar, founded in 1998 and headquartered in Dubai, provides end-to-end fuel logistics services, including maritime logistics, road transportation and warehousing, fuel tank storage, fuel distribution and aviation fuelling. Its revenue and EBITDA stood at $1.4 billion and $257 million, respectively, in CY25, with fuel distribution and storage tank farms contributing around 80% of revenue. Tristar reported profit after tax of $82 million in CY24 and $95 million in CY25.

JM Financial estimates that Aegis Logistics' FY27 earnings per share could rise to Rs 55 in the event of an acquisition, compared with the brokerage's estimate of Rs 42 without the deal. It added that the acquisition could improve Aegis Logistics' earnings profile and help deploy its cash balance, which currently earns modest returns.

Potential synergies and valuation

The brokerage sees potential synergies in Aegis Logistics' liquid logistics segment, including its distribution business. Tristar's end-to-end fuel logistics capabilities could complement Aegis Logistics' existing operations and support its expansion into additional liquid logistics services. The deal could also provide opportunities for Aegis Logistics' subsidiary, AVTL, to grow its logistics business in India and expand into special gases handled by Tristar.

JM Financial also highlighted Aegis Logistics' track record of asset turnarounds, citing previous acquisitions of an LPG facility at Pipavav from Shell and liquid tankage from Friends Group and Vopak at Kandla. The brokerage said these transactions had delivered significant turnarounds, while Tristar could offer further opportunities if the acquisition takes place at an attractive valuation.

The brokerage values Aegis Logistics at 35 times its estimated earnings per share for the first half of FY29 and has retained its target price of Rs 1,610, along with its Buy rating. It said the stock could offer further upside if Tristar is acquired and the deal proves earnings-accretive, even without factoring in a potential valuation re-rating.