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IIFL
Blue Dart (Buy)
CMP: ₹6,254.20
Target: ₹7,000
Blue Dart Express, incorporated in 1991, is one of the leading logistics companies in the world. Blue Dart Express is South Asia’s premier courier and integrated express package distribution company. It has the most extensive domestic network covering over 33,867 locations, and services more than 220 countries and territories worldwide through its group company DHL, the premier global brand name in express distribution services.
In 4QFY16, Blue Dart Express’ revenue growth moderated to 10 per cent y-o-y and its Ebitda margins and PAT growth were depressed, partly due to non-recurring expenses booked towards employee bonus payment (retrospective provision due to change in Act). Even adjusting for this expense, Ebitda margins at 12 per cent (flat y-o-y) and PAT growth at 35 per cent y-o-y were below our estimates.
Slower-than-expected revenue growth (moderation in e-commerce segment) and lower adjusted Ebitda margins due to negative operating leverage led to the miss in the quarterly earnings.
We cut FY17/18ii EPS forecasts by 4-7 per cent to reflect the slower-than-expected revenue growth. We expect BDE’s FY16-18ii EPS growth at 19 per cent a year, backed by the e-commerce segment. In this context, valuations are seemingly rich (63x FY17ii EPS), and would await revival in e-commerce revenue growth for further re-rating.
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