Sell Blue Dart Express; target of Rs 1746: ICICI Securities

ICICI Securities is bearish on Blue Dart Express has recommended Sell rating on the stock with a target price of Rs 1746 in its research report dated August 02, 2020.

Broker Research

August 19, 2020 / 11:03 IST

ICICI Securities research report on Blue Dart Express

Blue Dart Express (BDE) has reported lower-than-expected earnings in Q1FY21. Standalone EBITDA loss came in at Rs1,182mn against expected EBITDA loss of Rs38mn. Consolidated EBITDA loss was Rs425mn against Rs365mn expected EBITDA. Standalone gross margin contracted to 16% from 28% QoQ and 34% YoY. To note, the compression in gross margin is post Ind-AS 116 relief on rentals. The cost of sustaining five aircraft bears on margin and profitability in periods of sharp revenue decline like Q1FY21 (topline declined by 47% YoY). Management highlighted: i) Majority of Q1 business has been conducted in June, ’20 ii) July, ’20 has seen a significant improvement vis-à-vis Q1, though more on B2C side than B2B side and iii) volumes in Q1FY21 were not completely comparable YoY, as many charter services ran given disruption of B2B services.

Outlook

We downgrade BDE to SELL from HOLD with a revised target price of Rs1,746/share (earlier Rs1,944/share).

For all recommendations report, click here