Motilal Oswal's research report on Blue Dart Express
Blue Dart Express (BDE) commands greater than 50% market share in the organized Air Express segment and has been picking up market share in the Ground Express segment. The company has well-diversified service offerings of Air express (~65% revenue share) and Ground express (~35% revenue share). Despite the challenging last few years, BDE has managed to grow revenue through improved volumes and realizations. Through its dedicated aircraft fleet service, its operations were not as severely impacted as pure Road transporters during the pandemic. The Ground express segment is expected to grow at 2x the air express segment. BDE is looking to increase the share of Ground express in its overall mix to better capitalize on the growth opportunity. Aviation Turbine Fuel (ATF) accounts for ~40% of direct operating costs for an Express Logistics airline. The ATF prices have reduced in the recent months after a sharp rise in FY22. However, the reduction in ATF prices has been not in sync with the reduction in Brent crude price. Now, with the recent change in benchmarking of ATF pricing to MOPAC (Mean of Platt Arab Gulf oil price), the ATF prices are expected to reduce in December. We believe this reduction would support margins for BDE and would also support higher air freight volumes.
We expect BDE to clock a revenue/EBITDA/PAT CAGR of ~17%/14%/15%, respectively, over FY22-24, and we reiterate our Neutral rating, with a TP of INR8,110 (20x FY24E EV/EBITDA).
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