Bluedart Express - Downgrading to ACCUMULATE - Destimoney Securities Ltd

- Though recording a healthy 16% topline growth YoY, Bluedart reflected deceleration in economic growth as quarterly growth fell from the highs of 34% to 16%.

- Pressure on freight handling charges relaxed as crude prices corrected considerable thereby helping the bottomline.

- Rupee appreciation at the fag end of the quarter also helped improve burden on profitability. Bluedart has ~$1.3 mn exposure to forex on account of leased fleet of aircrafts.

- The management indicated that signs of down-trading are surfacing as customers switch from premium time definite services to non-time definite services like surface line.

- Additionally, increasing trend of budding e-commerce companies like Flipkart, Infibeam, Myntra operating their own logistics in key territories is eating into the potential market pie of Bluedart.

- We expect the company's revenue to grow at 19% between CY11-CY16, well above the expected 17% industry growth rate attributed to its pricing power for the unparallel quality of service (QoS).

- Considering the macroeconomic headwinds which will have direct bearing on company's growth in near term, we downgrade our rating on BLUEDART to ACCUMULATE with a revised target price of Rs.2,027 per share.

Source : Equity Bulls

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