Add Bluedart Express Ltd For Target Rs.4,403 - Yes Securities
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Highlights
* Revenues grew by 21% yoy to Rs10.3 bn. The growth was driven by ~15% growth in volumes and balance in realizations. The Company saw strong pickup from sectors like E‐commerce, Pharma and Consumer Electronics driven by shift in Consumer buying behavior and consumption pattern.
* During the quarter, volumes were driven by higher share of packages while document shipments were lower. With limited travel, documents related to passport delivery were low. Similarly, with several exams postponed, document delivery related to those exams got impacted
* Moderation in Freight Handling costs and employee cost supported profitability. The margins were supported by operating leverage as festive demand supported volumes and pricing. The margins may marginally correct in coming quarters.
* During Q3, the Company reversed Rs.83 mn of past provision made related to restructuring exercise.
* BDE had levied Emergency Situations Surcharge on certain shipments to offset low capacity utilization which got over by December. It was to be replaced through general price increase (GPI) from January 2021. The Company is currently in discussion with customers to implement the price increase.
* During the quarter, BDE purchased two of the six aircraft it was leasing till now for Rs.500 mn. The Company maintains its capex guidance of Rs.1.5 bn for FY21.
Our View
* The Company saw strong recovery across Air and Surface segments. The weakness in documents segment was more than covered by the packages segment growth.
* We expect BDE to enjoy premium pricing in some of the segments and we expect it to benefit from general economic recovery. Both Air and Surface cargo segments are likely to do well.
Valuation
* We roll forward our estimates to FY23 and upgrade the stock from REDUCE to ADD with target of Rs. 4,403 (45x FY23 P/E).
Risk To Our Call
* COVID 2nd wave leading impacting shipments.
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