Liquid and Gas Logistics in India

When we talk about India’s energy future, one sector quietly gaining momentum is liquid and gas logistics. Whether it’s LPG for households, propane for industries, or even ammonia for fertilizers and clean energy, demand for efficient storage and transport infrastructure is climbing. The coming years could see this industry mirror China’s growth story from the early 2010s—only bigger and faster.

Demand Tailwinds Driving Growth

Rising LPG Imports

India’s domestic LPG production has remained flat since FY19, but consumption continues to rise. Between FY19–25, LPG imports grew at a 7.7% CAGR, taking import dependency from 53% to 66%. This trend is expected to continue, with demand outpacing local supply.

Forecast Growth Ahead

As per JM Financial’s estimates, LPG demand will likely grow at 4–5% CAGR between FY25–30, with imports rising even faster at 6–7% CAGR. That translates into 1.5–2.0 million tonnes of additional import demand every year.

Industrial Usage on the Rise

Industries are increasingly switching from PNG and diesel to propane/LPG, thanks to lower costs and minimal conversion expenses. In fact, India now looks much like China in 2014, just before its industrial LPG demand surged at 24% CAGR for a decade.

Policy Push for Clean Cooking Fuel

Government programs such as PMUY subsidies, combined with higher incomes and better distribution, have helped LPG penetration jump from 42% of households in 2013 to 77% in 2023. This policy support means more per-capita usage, particularly among low-income households.

Ammonia Logistics – The Next Frontier

With fertilizer and petrochemical expansions underway, and green ammonia export projects by companies like L&T at Kandla and Paradip, demand for import and storage terminals is set to rise. Currently, this space has very few organized players—creating a unique opportunity.

Liquid Storage Capacity

As the economy grows, so does the need for petroleum products, petrochemicals, and edible oils. High-specification tankage at ports commands up to ₹800/cbm/month (versus just ₹130 for basic vegetable oil tanks), but requires technical expertise and strong customer ties.

Key Risks to Watch

• Rapid expansion of PNG/natural gas networks could slow LPG demand in urban areas.
• Large customers setting up captive storage may increase competition.
• Execution risks tied to multi-billion-dollar capex plans remain a concern.

Company Snapshots

Aegis Vopak Terminals (AVTL) – Focused on LPG & Liquids Terminals

A joint venture between Aegis Logistics and Royal Vopak, AVTL is expanding aggressively in LPG, liquids, and ammonia logistics.

• LPG throughput expected to rise from 1.8 mnt (FY25) to 8.1 mnt (FY28) – a 65% CAGR.
• Liquid capacity increasing from 1.6 mn cbm to 2.2 mn cbm by FY28.
• Ammonia terminals at Kandla and Pipavav could add ₹2.3 bn EBITDA by FY28.
• Financials: 58% EBITDA CAGR, 104% EPS CAGR (FY25–28). ROE improves from 8.7% to 20%; net debt falls from ₹19 bn to ₹12 bn.
• Valuation: BUY with a target of ₹340/share (+38% upside).

Aegis Logistics (ALL) – The Parent with Wider Reach

Owning LPG terminals in Mumbai and Haldia, plus a nationwide distribution network, ALL benefits both from AVTL’s growth and its own sourcing strength.

• Volumes: Consolidated LPG volumes projected at 11.2 mnt by FY28.
• Liquid logistics EBITDA expected to reach ₹10.3 bn.
• Financials: 35% EBITDA CAGR, 24% EPS CAGR (FY25–28). ROE improves from 15% to 27%.
• Valuation: BUY with a target of ₹965/share (+37% upside). Its 44.7% stake in AVTL provides a leveraged play on AVTL’s capex.

✨ Investment Takeaway

India’s ports-based LPG and liquids logistics industry is at a turning point. With rising imports, increasing industrial propane adoption, and new opportunities in ammonia logistics, the runway for growth looks long.

• Aegis Vopak Terminals (AVTL) offers a focused play on high-growth infrastructure with strong earnings momentum.
• Aegis Logistics (ALL) provides a broader exposure across sourcing, storage, and distribution.

For investors looking at long-term infrastructure-led growth stories, this space deserves close attention.

FAQs

1. Why is LPG import rising in India?
Because domestic production has stagnated while consumption continues to grow, leading to higher import dependency.

2. What makes propane attractive for industries?
Propane/LPG is cheaper than diesel and PNG, and requires minimal conversion investment, making it a cost-effective alternative.

3. What is driving demand for ammonia logistics?
Expansion in fertilizers, petrochemicals, and green ammonia projects are creating new storage and import needs.

4. How does Aegis Vopak benefit from this trend?
With its strong terminal expansion plans in LPG, liquids, and ammonia, AVTL is positioned to capture a major share of rising demand.

5. Is this industry risky?
Yes, risks include faster PNG adoption, captive storage by big players, and execution challenges in large capex projects.