Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Blue Dart Express - Weakness in operating metrics to persist - ICICI Securities

Posted On: 2020-08-03 08:44:07

Blue Dart Express (BDE) has reported lower-than-expected earnings in Q1FY21. Standalone EBITDA loss came in at Rs1,182mn against expected EBITDA loss of Rs38mn. Consolidated EBITDA loss was Rs425mn against Rs365mn expected EBITDA. Standalone gross margin contracted to 16% from 28% QoQ and 34% YoY. To note, the compression in gross margin is post Ind-AS 116 relief on rentals. The cost of sustaining five aircraft bears on margin and profitability in periods of sharp revenue decline like Q1FY21 (topline declined by 47% YoY). Management highlighted: i) Majority of Q1 business has been conducted in June, '20 ii) July, '20 has seen a significant improvement vis--vis Q1, though more on B2C side than B2B side and iii) volumes in Q1FY21 were not completely comparable YoY, as many charter services ran given disruption of B2B services. We downgrade BDE to SELL from HOLD with a revised target price of Rs1,746/share (earlier Rs1,944/share).

- While BDE was trying to implement cost rationalisation, Q1FY21 highlighted further weaknesses. Gross margin (standalone) disappointment in Q1FY21, despite Ind-AS 116 adjustment of last year, highlights the heavy operating leverage of BDE. Our base case margin assumptions factor in a consistent 10% p.a. volume growth in air cargo. What if, volume growth disappoints, given i) increase belly cargo of commercial airlines and ii) steady loss of share to road express.

- Management hints at no improvement in prices over Q1/near term. BDE has mentioned that it has witnessed significant opportunity in international and domestic charter - palletised capacity for carriage of urgent and large volumes to multiple airports in India and cross border. However, there is little scope for increase in prices given the current demand-supply scenario.

- Drop in gross margin vis--vis road express player like TCI Express highlights the relative business moat. While an asset-light road express player like TCI Express could improve gross margin despite significant volume weakness, the same for BDE has dropped materially - more to do with acceptability of the product at the offered price points in our view. Even rail players (EXIM container) have fared better than BDE in the current quarter.

- We downgrade BDE to SELL from HOLD. We have been working with 10% p.a. volume growth scenario for BDE's air freight, which also dictated our margin assumptions for the business. We introduce another scenario of 3% volume growth over the foreseeable future, given the current competitive dynamics and market scenario. The weighted average target price of those two scenarios comes to Rs1,746/share. Downgrade to SELL.

Shares of BLUE DART EXPRESS LTD. was last trading in BSE at Rs.1978.1 as compared to the previous close of Rs. 2061.85. The total number of shares traded during the day was 1726 in over 479 trades.

The stock hit an intraday high of Rs. 2055.05 and intraday low of 1955.55. The net turnover during the day was Rs. 3422083.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:


Mutual Fund Review - September, 2020 - ICICI Securities

UTI AMC announces IPO date - Angel Broking

Asian Paints - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Britannia Industries - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Hexaware Technologies (Not Rated): Hexaware accepts 475/share as final delisting price - ICICI Securities

CAMS IPO - Day 2 Subscription - Angel Boking

Chemcon Speciality Chemicals - IPO subscribed 12.62 times on second day - Angel Broking

General insurance - Fire, health remain growth drivers, rising Covid claims a concern - ICICI Securities

Supreme Industries - Perfect recipe for rerating; upgrade to BUY - ICICI Securities

Titan Company - Best positioned to gain from faster-than-expected recovery. Upgrade to ADD - ICICI Securities

Sector Update - Telecom - Sep 23, 2020 - ICICI Securities

Allcargo Logistics - Highlights of Blackstone deal - ICICI Securities

I-direct Instinct - Gokaldas Exports

Economy: RBI's trilemma: allows for INR strength - Kotak

HCL Technologies - Company Update - ICICI Securities

Chemcon Speciality Chemicals - IPO Review - ICICI Securities

Angel Broking - IPO Note - YES Securities

TCS - Announcement of its blockhchain based solutions on Microsoft Azure - Angel Broking

Amber Enterpirses acquire Sidwal - Angel Broking

Dixon Technologies - Buy - YES Securities

HCL Technologies acquisition of DWS Limited - Angel Broking

Allcargo Logistics CFO Resignation - Angel Broking

Upgrade to BUY on Gateway Distriparks - Strengthening the balance sheet - HDFC Securities

BUY on ITD Cementation - Execution pickup awaited - HDFC Securities

Allcargo Logistics - Trying to stich through an integrated offering - ICICI Securities

Polymer price tracker - Other polymer (ex-PVC) prices too firm up - ICICI Securities

Angel Broking - IPO Review - ICICI Securities

IPO Review - Computer Age Management Services - ICICI Securities

Company Update - EIH Ltd - ICICI Securities

Gladiator Stocks - Godrej Properties - ICICI Securities

Company Update - Dr Reddy's Laboratories - ICICI Securities

Gladiator Stocks: Pharma Thematic - ICICI Securities

Company Update - Housing & Urban Development - ICICI Securities

Covid Recovery Pulse - E-Way bill generation shows recovery signs with auto volumes flat - ICICI Securities

Quant Pick - UltraTech Cement - ICICI Securities

Lupin & Cipla - Positive News - Angel Broking

Sterling and Wilson Solar Ltd - 106.71 MW order win - Angel Broking

Dr. Reddy's Laboratories - Settles Revlimid litigation in US - ICICI Securities

Natco Pharma - Natco to launch first generic Revlimid - ICICI Securities

Solar Industries - Overseas and defence key to profitability - ICICI Securities

Federal Bank - Strengthening liability muscle; fees & charges revised upwards - ICICI Securities

HCL Technologies Mr. Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd


I-direct Instinct - Intellect Design Arena

P&G Health - Company Update - ICICI Securities

Relaxo Footwears - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Bata India - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Listing of Happiest Minds Technologies - Angel Broking

Dr. Reddy's Lab - Sep 17, 2020 - Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019