Add Blue Dart Express Ltd for the Target Rs 5,750 by Emkay Global Financial Services Ltd
Blue Dart Express (BDE) reported a strong 1QFY27, with revenue up 15% yoy (+5%/10% vs our/street estimates), driven by a combination of tonnage growth (+7% yoy) and pricing actions—general price increases (GPI) across the customer base, targeted corrections on loss-making lanes/customers, and a stepped-up fuel surcharge (diesel-linked surcharge revised from May-26; air/ATF-linked surcharge from Apr-26). Consolidated EBITDA rose 34% yoy to Rs2.6bn, while margin expanded by 219bps to 15.8%, above our/street estimates by 278/237bps. Surface express continues to be the volume growth driver, at 9% yoy, outpacing air’s (+2.6% yoy). We believe higher contribution from the surface express business could weigh on margin trajectory, as the mix toward dense load increases. However, owing to elevated fuel prices, we expect realization benefits to flow through the remainder of FY27, resulting in a 70bps upward revision of our FY27E EBITDA margin. We bake in 10%/12% revenue/EBITDA CAGR over FY26-29E. Factoring in the 1Q margin beat, we raise FY28E/FY29E PAT by 8%/7% and raise our Jun-27E TP by ~6% to Rs5,750 from Rs5,450 (DCF methodology), implying FY28E EV/EBITDA of 11x and PER of 31x (LTA: 16x EV/EBITDA, 48x PER); maintain ADD
Margins expand on back of GPI and fuel surcharge
BDE’s consolidated revenue grew 15% yoy to Rs15.3bn. Volumes/shipments for the quarter stood at 364k/96mn metric tons, growing 7%/2% yoy, respectively. Volumes continue to be driven by surface express (9% yoy) while air lags (2.6% yoy). Blended realization per kg grew 8% yoy, as fuel surcharge mechanism kicked in on the back of an increase in ATF/diesel prices. Air/surface revenue mix for the quarter stood at 60%/40%; the mix in terms of weight came in at 25%/75%. Gross margin narrowed by 27bps yoy to 41.7%, while EBITDA margin expanded by 219bps to 15.8%, on the back of GPI and fuel surcharge. PAT grew 81% yoy to Rs885mn, primarily due to strong operating leverage as D&A grew 13% yoy.
Earnings call KTAs
1) B2C/B2B revenue mix came in at 30%/70% for 1Q. The auto segment has been growing in high teens for several years. Document + small courier segment (incl BFSI) contributed 25% to revenue in 1Q.
2) After the rate hike in May-26, the management delivered realization growth of 8%, with full absorption expected through 2QFY27.
3) Ecommerce revenue grew 10% yoy, as shipments now contribute more than half to the total consolidated shipments (50mn+).
4) Currently, BDE is operating at 85-90% volumetric utilization (pallet level); the management stated the two aircraft added in CY24 are now fully stabilized/integrated into the network.
5) The management guided for FY27 capex spend of Rs1-1.5bn, with capex for the aviation entity at ~120% of the depreciation expense.
6) The management stated that with hubs added in North and East India, next targets are expansion/consolidation into Mumbai and South India in the medium term
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