We recommended Aegis Logistics in Mar'14 at the price of Rs. 160. At the current market price of Rs. 376, Aegis Logistics has delivered 135% returns since our first recommendation.  At this stage, we recommend to completely book profits in this stock.

Our investment premise was based on the company’s stable annuity business in the liquidity logistics space, asset light nature of its gas logistics business and attractive valuations. Aegis has reported healthy sales and earnings growth over the past two quarters, a trend which we believe may continue.  However, valuations at 20x FY14 earnings are no longer attractive (9x at the time of recommendation).

Our exit call is based on an assessment that incremental growth in the liquid logistics business will entail high capex and debt. Also, the incremental returns on its new facilities are lower than that in Mumbai.

The pace of earnings growth won’t materially surprise vis-à-vis our assumptions while recommending the stock. In this light, the current valuations at 20x FY14 P/E are fair and risk reward doesn’t look favorable.

We recommend an EXIT at Rs. 376 with gains of 135% in six months.

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