Neutral Blue Dart Express; target of Rs 8110: Motilal Oswal

Motilal Oswal's research report on Blue Dart Express

Blue Dart Express (BDE) reported 18% YoY revenue growth to ~INR13.3b in 2QFY23 (est. INR12.6b). EBITDA margin, however, stood at 12.3% (est. 15.2%), lower by 540bp YoY and 250bp QoQ. Indian ATF fuel prices have not corrected in line with global crude prices that impacted BDE’s margin adversely. Inflationary pressure remained high in 2QFY23 leading to a rise in several other costs. APAT decreased ~27% YoY to INR920m (19% below our estimate of INR1.1b). During 1HFY23, BDE’s revenue grew 32% YoY to INR26.2b. EBITDA margin stood at 13.5% (v/s 14.2% in 1HFY22). APAT grew 35% YoY to INR2.1b. We reduce our FY23/24 EPS estimates by 13%/3%, respectively, factoring in higher inflationary pressure and rising competition that could keep margins under check.

Outlook

We retain our Neutral rating on the stock, with a revised TP of INR8,110 (premised on 20x FY24E EV/EBITDA).