ICICI Direct is bullish on BlueDart Express has recommended Buy rating on the stock with a target price of Rs 5000 in its research report dated October 18, 2017.
ICICI Direct's research report on BlueDart Express
Revenues grew 6% YoY (up 5.4% QoQ) to Rs 702.8 crore (I-direct estimate: Rs 696.4 crore). The B2C segment continued to remain subdued, contributing 21-22% of overall revenues while the remaining contribution (78-79%) was from B2B. Utilisation levels for the quarter were at 83-85% compared to 80% in Q1FY18 • Post de-growth for four consecutive quarters, EBITDA showed signs of revival with a marginal growth of 3% YoY to Rs 76.7 crore (I-direct estimate: Rs 66.2 crore) reflecting operating synergies. The impact of revision of employee expenses (up 12% YoY) under Minimum Wages Act continued to moderate margins. EBITDA margins declined 36 bps YoY to 10.9% (I-direct estimate: 9.5%) • A better-than-expected operational performance was completely offset by higher depreciation (up 5% YoY) and lower other income (down 17% YoY). The resultant PAT de-grew 3% YoY to Rs 41.4 crore (I-direct estimate: Rs 35.2 crore) vs. Rs 42.8 crore in Q2FY17.
The Indian logistics industry, which is highly fragmented with ~50% unorganised share, is expected to favour pan-India organised logistics players. In addition, a direct correlation of ~2x to GDP and trade growth, buoyancy in the same would support sector growth rates. BlueDart, being one of the largest organised surface logistics players, will benefit from these tectonic policy changes. We believe growth rates would be much higher post GST-stabilisation period. Given the benefits to accrue over a longer period of time, we continue to value BDE on a DCF model maintaining target price of Rs 5000 with a BUY recommendation.
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