ICICI Direct's research report on BlueDart Express
BlueDart has been reporting a stellar uptick in performance post Q1, registering revenue growth of 8% and 21% YoY in Q2 and Q3, respectively. Shift in consumer buying behaviour and consumption patterns, led to higher growth in the B2C and B2B segments. Due to the strong growth, the utilisation of assets remained high (85%+). The revenue performance was further assisted by expansion in EBITDA margins by 1880 bps and 780 bps to 26.4% and 24.3% in Q2 and Q3, to yield an absolute EBITDA of Rs 229 crore (up 3x YoY) and Rs 252 crore (up 77% YoY), respectively. The company was able to maintain its EBITDA margins at 24-26%, led by cost efficiencies and higher operating leverage. BlueDart has also acquired two Boeing 757-200 aircraft to derive economic value in the long run.
Outlook
BlueDart has been a beneficiary of flight to quality trend post Q1, which resulted in higher tonnage growth, backed by greater digital connect with customers and focus on servicing bigger customers and brands. On the B2C segment, healthy growth returned to its fold, further shoring up BlueDart’s strategy to participate in only profitable orders. With a revival in its B2C and B2B segments and a continued expansion in margins, along with strengthening of FCF, we change our recommendation from HOLD to BUY with a revised target price of Rs 6300 (earlier Rs 2100).
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