COMPANY
REPORT
October 20, 2014
Blue Dart Express Ltd.
Improving operating margin
RESULTS
REVIEW
CMP Rs5,068
Target Price Rs3,736
Potential Upside/Downside (26)%
Relative to Sensex
Summary
Blue Dart Express (BDE) reported revenue growth of ~23% YoY, better than our estimate.
Adjusted OPM increased 257bps YoY and 61bps QoQ to 11.4% during Q2FY15.
APAT increased ~55% YoY (better than our expectation), due to improved operating margins
and lower tax rate (25.2% of PBT).
Management said that E-commerce segment have been growing at 50-60% YoY and currently
contributing ~18% of revenues.
Due to better than expected performance in Q2FY15, we are increasing our FY15 EBITDA and
PAT estimates by ~5% and 5% respectively. We are raising our FY16 EBITDA and PAT
estimates by 4.4% and 4.3% respectively.
We are positive on the revenue growth prospects of express segment and E-commerce
segment on the back of improvement in economic growth but considering rich valuations,
we maintain our SELL rating.
Key Highlights
Revenue growth of ~23% YoY, driven by e-commerce segment
BDE reported revenue growth of ~23% YoY to Rs5,817 mn during Q2FY15, which was above
our estimates. We believe E-commerce segment will witness higher growth in near term.
Management expects that consistent growth in revenues and margin improvement will begin
from FY16.
Adjusted OPM improved to 11.4% due to lower freight, handling and servicing cost
Adjusted EBITDA increased by 59% YoY to Rs665 mn, which was mainly due to 20% YoY
increase in Freight, handling and servicing cost, 15% YoY rise in employee expense and 25%
YoY increase in other expense. Freight, handling and servicing cost has been adjusted for
impairment for overhauled engine cost of Rs159.1 mn during Q2FY15. Adjusted EBITDA margin
improved 257bps YoY and 61bps QoQ to 11.4% during Q2FY15.
APAT increased 55% YoY, due to lower tax expense
APAT increased 55% YoY, due to improved Adjusted EBITDA margin and higher tax rate (25.2%
of PBT). Higher depreciation expense was mainly due to additional depreciation charge of
Rs22.9 mn during Q2FY15 after the reassessment of the remaining useful life of assets done by
Management. PAT margin increased 166bps YoY and improved by 155bps QoQ to 8.0%.
Outlook and valuation
We continue to remain positive on the companys growth prospects over the longer term due
to its wide reach, strong back-end and market leadership in air express segment. We believe
that the e-commerce segment will be the key growth driver for Blue Dart. Considering the rich
valuations, we maintain our SELL rating but re-rating our valuation multiple upwards to 40x
implying higher target price of Rs3,736 (earlier Rs3,132 at 35x FY16E EPS).
Source: Capitaline
SELL
Nifty: 7,780; Sensex: 26,109
Sector Logistics
Bloomberg / Reuters BDE IN / BLDT.BO
Shares o/s (mn) 24
Market cap. (Rs mn) 1,22,112
Market cap. (US$ mn) 1,994
3-m daily average vol. 1,403
Key Stock Data
52-week high/low Rs5,578/2,651
-1m -3m -9m
Absolute (%) 7 23 86
Rel to Sensex (%) 9 21 58
Price Performance
Promoters 75.0
FIIs/NRIs/OCBs/GDR 7.5
MFs/Banks/FIs 6.1
Non Promoter Corporate 7.5
Public & Others 3.9
Shareholding Pattern (%)
Table: Financial snapshot (Rs mn)
Year Revenue EBITDA EBITDA (%) Adj. PAT EPS (Rs) P/E (x) EV/EBITDA (x) RoE (%) RoCE (%)
FY13 21,673 2,644 12.2 1,933 65.2 77.8 55.7 23.4 27.1
FY14 19,383 1,861 9.6 1,346 56.7 89.3 63.7 20.5 23.6
FY15E 23,373 2,454 10.5 1,652 69.6 72.8 48.4 25.4 31.2
FY16E 27,561 3,307 12.0 2,216 93.4 54.3 35.9 34.6 44.4
* FY13 is for 15 months
Source: Company; IDBI Capital Research
Analyst
Deepan Sankara Narayanan
+91-22-4322 1368
[email protected]
80
100
120
140
160
180
200
220
O
c
t
-
1
3
N
o
v
-
1
3
D
e
c
-
1
3
J
a
n
-
1
4
F
e
b
-
1
4
M
a
r
-
1
4
A
p
r
-
1
4
M
a
y
-
1
4
J
u
n
-
1
4
J
u
l
-
1
4
A
u
g
-
1
4
S
e
p
-
1
4
O
c
t
-
1
4
BDE Sensex
2
Q2FY15 Result Review Blue Dart Express Ltd.
Table: Quarterly snapshot (Rs mn)
Year-end: March Q2FY14 Q2FY15 YoY (%) Q1FY15 QoQ(%)
Net sales 4,716.0 5,816.6 23.3 5,269.5 10.4
Freight, handling & servicing cost 3,200.1 3,848.1 20.2 3,493.5 10.2
as % of sales 67.9 66.2 66.3
Employee Expenses 689.3 793.7 15.1 751.3 5.6
as % of sales 14.6 13.6 14.3
Other exp 408.7 510.1 24.8 454.9 12.1
as % of sales 8.7 8.8 8.6
Total operating expenses 4,298.1 5,151.9 19.9 4,699.7 9.6
as % of sales 91.1 88.6 89.2
Adj EBITDA 417.9 664.7 59.1 569.8 16.7
EBITDA margin (%) 8.9 11.4 10.8
Other income 85.6 66.4 (22.4) 66.1 0.5
Interest 0 0
0
Depreciation 68.3 107.0 56.7 96.3 11.1
Profit/(loss) before tax 435.1 624.1 43.4 539.5 15.7
Tax 134.5 157.0 16.7 197.9 (20.7)
Tax rate (%) 30.9 25.2 36.7
Adj Net profit 300.6 467.1 55.4 341.6 36.7
Extra-ordinaries
Reported Net Profit 300.6 467.1 55.4 341.6 36.7
Source: Company; IDBI Capital Research
Figure: Quarterly Revenue & OPM
Source: Company; IDBI Capital Research
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0
1000
2000
3000
4000
5000
6000
7000
Q2CY12 Q3CY12 Q4CY12 Q5FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15
(
%
)
(
R
s
m
n
)
Revenue (LHS) OPM (RHS)
Q2FY15 Result Review Blue Dart Express Ltd.
3
Figure: PAT
Source: Company; IDBI Capital Research
Figure: Tonnage
Source: Company; IDBI Capital Research
Figure: Shipment
Source: Company; IDBI Capital Research
406
322
450
418
407
301
350
307
342
467
0
50
100
150
200
250
300
350
400
450
500
Q2CY12 Q3CY12 Q4CY12 Q5FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15
(
R
s
m
n
)
232
268
338
423
594
514
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2013* 2014
(
'
0
0
0
)
* 2013 is for 15 months
79
77
87
100
142
127
0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2013* 2014
(
m
n
)
* 2013 is for 15 months
4
Q2FY15 Result Review Blue Dart Express Ltd.
Financial Summary
Profit & Loss Account (Rs mn)
Year-end: March FY13 FY14 FY15E FY16E
Net sales 21,673 19,383 23,373 27,561
Growth (%) 45.2 11.8 20.6 17.9
Operating expenses (19,029) (17,522) (20,919) (24,254)
EBITDA 2,644 1,861 2,454 3,307
Growth (%) 49.6 (12.0) 31.9 34.8
Depreciation (347) (273) (377) (399)
EBIT 2,297 1,588 2,077 2,909
Interest paid (0) - - -
Other income 470 393 373 386
Pre-tax profit 2,767 1,861 2,450 3,295
Tax (834) (635) (798) (1,079)
Effective tax rate (%) 30.1 34.1 32.6 32.7
Net profit 1,933 1,226 1,652 2,216
Adjusted net profit 1,933 1,346 1,652 2,216
Growth (%) 55.6 (12.9) 22.7 34.1
Shares o/s (mn nos) 24 24 24 24
Balance Sheet (Rs mn)
Year-end: March FY13 FY14 FY15E FY16E
Net fixed assets 2,329 2,556 2,679 2,814
Investments 228 228 228 228
Other non-curr assets - - - -
Current assets 7,951 7,377 7,814 8,299
Inventories 24 21 26 30
Sundry Debtors 2,272 2,018 2,433 2,869
Cash and Bank 2,417 1,712 1,554 1,414
Loans and advances 3,239 3,626 3,801 3,985
Total assets 10,508 10,161 10,721 11,340
Shareholders funds 6,600 6,556 6,468 6,352
Share capital 238 238 238 239
Reserves & surplus 6,362 6,318 6,231 6,113
Total Debt - - - -
Other liabilities 148 148 148 148
Curr Liab & prov 3,760 3,457 4,105 4,840
Current liabilities 1,610 2,067 2,365 2,506
Provisions 2,151 1,390 1,740 2,334
Total liabilities 3,908 3,605 4,253 4,988
Total equity & liabilities 10,508 10,161 10,721 11,340
Book Value (Rs) 278 276 273 268
* FY13 is for 15 months
Source: Company; IDBI Capital Research
Cash Flow Statement (Rs mn)
Year-end: March FY13 FY14 FY15E FY16E
Pre-tax profit 2,767 1,861 2,450 3,295
Depreciation 140 273 377 365
Tax paid (834) (635) (798) (1,079)
Chg in working capital 1,545 (434) 53 111
Other operating activities - - - -
Cash flow from operations (a) 3,618 1,065 2,082 2,692
Capital expenditure (109) (500) (500) (500)
Chg in investments (26) - - -
Other investing activities - - - -
Cash flow from investing (b) 403 (500) (500) (500)
Equity raised / (repaid) (0) (0) (0) 1
Debt raised / (repaid) - - - -
Dividend (incl. tax) (1,971) (1,390) (1,740) (2,334)
Chg in minorities - - - -
Other financing activities (34) 120 - -
Cash flow from financing (c) (2,005) (1,270) (1,740) (2,333)
Net chg in cash (a+b+c) 2,016 (705) (158) (140)
Financial Ratios
Year-end: March FY13 FY14 FY15E FY16E
Adj. EPS (Rs) 65.2 56.7 69.6 93.4
Adj. EPS growth (%) 24.5 (12.9) 22.7 34.1
EBITDA margin (%) 12.2 9.6 10.5 12.0
Pre-tax margin (%) 12.8 9.6 10.5 12.0
ROE (%) 23.4 20.5 25.4 34.6
ROCE (%) 27.1 23.6 31.2 44.4
Turnover & Leverage ratios (x)
Asset turnover (x) 1.8 1.9 2.2 2.5
Leverage factor (x) 1.1 1.6 1.6 1.7
Net margin (%) 8.9 6.9 7.1 8.0
Net Debt / Equity (x) (0.4) (0.3) (0.2) (0.2)
Working Capital & Liquidity ratios
Inventory days 0 0 0 0
Receivable days 48 38 38 38
Payable days 17 15 15 15
Valuation
Year-end: March FY13 FY14 FY15E FY16E
PER (x) 77.8 89.3 72.8 54.3
Price / Book value (x) 18.2 18.3 18.6 18.9
PCE (x) 65.9 74.3 59.3 46.0
EV / Net sales (x) 6.8 6.1 5.1 4.3
EV / EBITDA (x) 55.7 63.7 48.4 35.9
Dividend Yield (%) 1.1 1.0 1.2 1.6
Q2FY15 Result Review Blue Dart Express Ltd.
5
Notes
Dealing (91-22) 6637 1150 [email protected]
Key to Ratings
Stocks:
BUY: Absolute return of 15% and above; ACCUMULATE: 5% to 15%; HOLD: Upto 5%; REDUCE: -5% to -15%; SELL: -15% and below.
IDBI Capital Market Services Ltd. (A wholly owned subsidiary of IDBI Ltd.)
Equity Research Desk
3rd Floor, Mafatlal Centre, Nariman Point, Mumbai 400 021. Phones: (91-22) 4322 1212; Fax: (91-22) 2285 0785; Email: [email protected]
SEBI Registration: NSE CM INB230706631, NSE F&O INF230706631, BSE CM INB010706639, BSE F&O INF010706639, NSDL IN-DP-NSDL-12-96
Compliance Officer: Christina Fernandes; Email: [email protected]; Telephone: (91-22) 4322 1212
Disclaimer
This document has been prepared by IDBI Capital Market Services Ltd (IDBI Capital) and is meant for the recipient only for use as intended and not for circulation. This document should not be
reproduced or copied or made available to others. No person associated with IDBI Capital is obligated to call or initiate contact with you for the purposes of elaborating or following up on the
information contained in this document.
Recipients may not receive this report at the same time as other recipients. IDBI Capital will not treat recipients as customers by virtue of their receiving this report.
The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be
fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied
upon as such. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.
Opinions expressed are current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis, the information discussed in this material, IDBI Capital,
its directors, employees are under no obligation to update or keep the information current. Further there may be regulatory, compliance, or other reasons that prevent us from doing so.
Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
IDBI Capital, its directors and employees and any person connected with it, will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including
notional losses/lost opportunities incurred by a recipient as a result of acting or non acting on any information/material contained in the report.
This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behaviour of investors or recipients or provide any investment/tax advice.
This report is for information only and has not been prepared based on specific investment objectives. The securities discussed in this report may not be suitable for all investors. Investors must
make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis.
Trading in stocks, stock derivatives, and other securities is inherently risky and the recipient agrees to assume complete and full responsibility for the outcomes of all trading decisions that the
recipient makes, including but not limited to loss of capital.
Opinions, projections and estimates in this report solely constitute the current judgment of the author of this report as of the date of this report and do not in any way reflect the views of IDBI
Capital, its directors, officers, or employees.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such
distribution, publication, availability or use would be contrary to law, regulation or which would subject IDBI Capital and affiliates to any registration or licensing requirement within such
jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are
required to inform themselves of and to observe such restriction.
IDBI Capital, its directors or employees or affiliates, may from time to time, have positions in, or options on, and buy and sell securities referred to herein. IDBI Capital or its affiliates, during the
normal course of business, from time to time, may solicit from or perform investment banking or other services for any company mentioned in this document or their connected persons or be
engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or
their affiliate companies or act as advisor or lender / borrower to such company(ies)/affiliate companies or have other potential conflict of interest.
This report may provide hyperlinks to other websites. Except to the extent to which the report refers to the website of IDBI Capital, IDBI Capital states that it has not reviewed the linked site and
takes no responsibility for the content contained in such other websites. Accessing such websites shall be at recipient's own risk.
E-mail is not a secure method of communication. IDBI Capital Market Services Limited cannot accept responsibility for the accuracy or completeness of any e-mail message or any attachment(s).
This transmission could contain viruses, be corrupted, destroyed, incomplete, intercepted, lost or arrive late. IDBI Capital, its directors or employees or affiliates accept no liability for any damage
caused, directly or indirectly, by this email.
