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Steady volumes; improved pricing drives earnings

* Blue Dart Express (BDE)’s revenue grew ~15% YoY to INR16.5b in 1QFY27 (5% above our estimate).

* EBITDA margin came in at 10.3% in 1QFY27 (up 340bp YoY and 220bp QoQ) vs. our estimate of 10%. EBITDA jumped ~70% YoY on account of a low base to INR1.7b (8% above our estimate).

* APAT was INR867m vs. INR469m in 1QFY26 (15% above our estimate).

* In 1QFY27, BDE reported steady volume growth of 7% YoY, while revenue increased 15% YoY, driven by the annual general price increase (GPI) and higher fuel surcharge, resulting in a 7% improvement in realizations.

* BDE posted strong earnings performance in 1Q, driven by healthy realizations. Going forward, both the ground and air express segments would likely continue to witness healthy traction, and margins are expected to improve gradually. We broadly maintain our FY27 and FY28 estimates and reiterate our BUY rating with a TP of INR6,100 (based on 15x FY28E EV/EBITDA).

Steady volume growth; Air:Surface mix at 60:40

* In 1QFY27, BDE reported a shipment volume of 96.15m (+2% YoY) and tonnage of 0.36mt (+7% YoY).

* Air Express contributed ~60% and Surface Express ~40% of total revenue. B2B/B2C segments accounted largely for 70%/30% of revenue. B2C mainly included e-commerce shipments.

Highlights from the management commentary

* Revenue grew 15% YoY during the quarter, driven by a mix of GPI and fuel surcharge, while volume grew 7% YoY. ? Air volume increased ~2.6% YoY, while surface volume grew ~9% YoY.

* The company holds an estimated market share of ~70% in the organized document express services segment. Documents and small parcel business together contribute around 25-30% of revenue. The BFSI segment accounted for ~10-15% of the revenue.

* FY27 capex is expected at INR1.0-1.5b.

* Automotive continues to be a key vertical and has been growing in the high teens, largely driven by express movement of spare parts.

* Despite higher fuel prices, the company was able to manage and improve margins due to the fuel cost pass-through mechanism in place.

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