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Target: ₹8,110
CMP: ₹7,588.60
Blue Dart Express (BDE) reported 18 per cent y-o-y revenue growth to about ₹1,330 crore in Q2-FY23. EBITDA margin, however, stood at 12.3 per cent, lower by 540 bp y-o-y and 250 bp q-o-q.
Indian ATF fuel prices have not corrected in line with global crude prices that impacted BDE’s margin adversely. ATF pricing is expected to be lowered in November 2022. EBITDA margin can improve depending upon the extent of ATF price decline. Margin can scale back to the 14-15 per cent range in the near to medium term. Inflationary pressure remained high in Q2-FY23 leading to a rise in several other costs.
BDE witnessed a healthy 24 per cent y-o-y volume growth in Q2-FY23. The Ground express segment has been growing strongly and now constitutes more than 30 per cent of the aggregate revenue. E-commerce segment also continued to do well and contributed nearly one-fourth of BDE’s business. Capacity utilisation continued to remain healthy. The company plans to add two Boeing 737 aircraft by end-CY22.
We reduce our FY23/24 EPS estimates by 13 per cent/3 per cent, respectively, factoring in higher inflationary pressure and rising competition that could keep margins under check. We retain our Neutral rating, with a revised target of ₹8,110.
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