Buy Blue Dart, :: ICICI Securities

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Growth in e-tailing to brighten prospect!!!
• BlueDart (BDE) continues to report robust revenue growth of 10%
QoQ and 23% YoY to | 581.7 crore in Q2FY15
• EBITDA growth for the quarter stood at 21% YoY to
| 50.6 crore. However, on a QoQ basis it declined ~11%. The
EBITDA margin for the quarter stood at 8.7%, a decline of 17 bps
YoY and 218 bps QoQ. The EBITDA margin contracted largely on
account of | 15.9 crore of impairment charges for the overhaul of
aircraft engine. Excluding this one-time expense, the EBITDA margin
for Q2FY15 stood at a healthy level of 11.4%
• Further, PAT growth for the quarter remained muted at 2.5% YoY
whereas it declined ~11% QoQ to | 30.8 crore
BlueDart maintains pole position in Indian express industry
The express industry is estimated at | 10,870 crore in FY12 and is
expected to grow at an average rate of 17% to | 17,450 crore by FY15.
Organised players together with postal department constitute 72% market
share whereas 15% is held by semi-organised players and residual with
other smaller players. The organised segment of the express industry
constitutes 48%, which is further segregated into air express (AE) and
ground express (GE). The organised air express industry is ~| 2400 crore
whereas ground express has market size of ~ | 2900 crore. BlueDart with
52% market share in AE is an undisputed leader followed by 14.5%
market share in GE.
Wide bouquet of products coupled with superior technology and network
A strong fleet of six aircraft and 8685 vehicles covering 34,257 locations
via 20 ground hubs and 166 network routes provides a significant
competitive edge to BDE. Further, with a wide band of innovative
products like time and day definite solution and packaging solutions, BDE
ensures end-to-end logistics solution provision for its clientele. Also,
BDE’s pioneering technology along with 19 core offerings and value
added services cover a gamut of industry requirements.
E-tailing and revival in economy to drive growth
The e-tailing business in India grew at a CAGR of 56% over FY08-13 and
is expected to maintain strong growth momentum of 54% over FY13-16.
With the continuous increase in internet penetration (currently around
11%) and growing use of smart phones and tablets, e-tailing growth is
expected to get accentuated in non-metro cities as well. Currently, BDE
derives ~18% revenue from e-tailing business and, going ahead, it
anticipates an orbital shift in revenue trajectory being driven by tier-II and
tier-III cities business growth. BDE largely derives revenue from its
institutional client base (96%) whereas the remainder belongs to retail
customers.
Growth traction in e-tailing segment buoys BDE prospects
With the economy set to gather steam, BDE coupled with a strong
balance sheet and debt-free capital structure is well equipped to ride out
the next growth cycle in the economy. Also, as the economy improves,
together with strong growth in e-tailing segment coupled with operating
leverage on enhanced package volume, BDE is expected to see a sharper
growth in earnings. Consequently, according to our discounted cash flow
based valuation, we assign a BUY recommendation to the stock with a
target price of | 6310.

Link
http://content.icicidirect.com/mailimages/IDirect_BlueDart_Q2FY15.pdf