Target: ₹7,700
CMP: ₹5,993.95
We hosted management of Blue Dart Express (BDE) recently and takeaways:
The company added two Boeing 737 freighters of 22 tonne each for cumulative ₹450 crore vs the current fleet of six Boeing 757 freighters of 33-tonne capacity. The new aircraft will begin operations by June post regulatory approvals in the tier II & III cities. Guwahati will be the eighth base station for BDE’s air cargo operations with daily flights catering to express cargo needs of Northeast states.
Overall, air express yield could decline in the near term as the new aircraft also will carry low yield, airport-to-airport cargo initially to fill capacity. In anticipation of higher demand, capacity expansion continues in the surface segment with the addition of 55+ owned retail stores.
Management has announced planned capex of ₹70 crore for domestic and ₹150 crore for air for FY24.
We retain our estimates with a revenue CAGR of 15 per cent and an earnings CAGR of 19 per cent over FY23-25. We remain positive, given market share growth, continued focus on service quality and capacity addition ahead of demand growth expectations.
We reiterate Buy with a lower target price of ₹7,700 from ₹8,733 on 35x (from 40x).