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Result Highlights

* Standalone Revenues grew by 33% YoY to Rs 9.7 bn which was lower than our estimates of Rs.10.9 bn. FY21 revenue grew by 4% to Rs32.8 bn.

* EBITDA of Rs.1.7 bn was in‐line with our estimates. EBITDA Margins improved to 18% vs 2.2% YoY/16.8% QoQ. Moderation in Freight Handling costs and employee cost supported profitability. For FY21, EBITDA Margins improved to 11.5% vs 5.9% YoY while Gross margin improved by 450bps to 36.2% vs 31.8% in FY20. EBITDA stood at Rs.3.8 bn, up 101% yoy.   

* Higher EBITDA and other income led to APAT of Rs 891 mn during Q4 FY21 (Rs.238 mn loss in Q4 FY20). PAT for FY21 came at Rs 963 mn (Rs.383 mn loss in FY20).

* The company has declared dividend of Rs15/share

* Receivable days declined to 57 days vs 60 days in FY20 while payable days grew from 45 days to 57 days yoy. Cash jumped to Rs3.1bn from Rs 985mn yoy while borrowing declined to Rs225mn from Rs525mn in FY20.

Our view:

Q4 saw an optically high revenue growth on the back of lower base of last year. The Company lost ~15% of the revenue due to lockdown in Q4 FY20. It targets for strong high double‐digit growth despite challenging times ahead driven by volume revival and general price hikes. Margins for the quarter came higher driven by the cost‐ control measures and discontinuation of loss‐making customers in E‐com segment. However, this elevated margin likely to taper down to its normalized range of 14‐16% in coming quarters.

The 2nd wave of COVID has impacted the document delivery segment (as offices are again shut or operating at lower capacity). However, BDE expects situation to normalize quickly as COVID impact settles and subsequent quarters to improve substantially. Currently, the stock trades at 69x/43x FY22/FY23 EPS. We have increased the margin expectations over FY22 and FY23 and retain our ADD rating on the stock for revised target price of Rs.5,590/share (45x FY23).   

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