Neutral Blue Dart Express; target of Rs 6190: Motilal Oswal

Motilal Oswal recommended Neutral rating on Blue Dart Express with a target price of Rs 6190 in its research report dated May 09, 2023.

Broker Research

May 12, 2023 / 22:35 IST

Neutral

Motilal Oswal's research report on Blue Dart Express

Blue Dart Express (BDE) reported 4% YoY revenue growth to ~INR12.2b in 4QFY23 (est. INR13.1b). BDE handled 0.27m tonnes of cargo volume (+9.5% YoY), while realization dropped ~5% YoY to INR44.5/kg during the quarter. EBITDA margin came in at 10.5% v/s our estimate of 11.8%. EBITDA declined 41% YoY to INR1.3b. APAT declined 48% YoY to INR703m in 4QFY23 (20% below estimate) led by weak operating performance. During FY23, BDE carried 328m shipments weighing 1.15m tonnes. The company reported revenue of INR51.7b (+17.3% YoY), EBITDA margin of 12.2% (-370bp YoY) and APAT of INR3.7b (-11% YoY) in FY23. BDE’s performance has been hit by subdued volumes and high ATF prices. While it has undertaken general price hike, the impact of the same would be visible from 1QFY24. Further, BDE is negotiating with airlines to provide discounts to compensate for the gap in pricing between Brent and global crude prices. We believe margin improvement could be gradual due to subdued volumes, current inflationary environment and start-up costs related to new aircraft additions.

Outlook

We cut our EBITDA for FY24E/FY25E by 11%/10%. We retain our Neutral rating with a revised TP of INR6,190 (premised on 16x FY25E EV/EBITDA).

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