Accumulate Blue Dart Express - Target Price Rs. 2620 - Kotak

Blue Dart Express (BDE) is the leader in the Air express market (over 47% market share) and is slowly gaining market share since it's entry in 2007 in the surface express market (over 13% market share). It has the requisite infrastructure, tie-ups, skilled manpower and an established brand name which is synonymous to reliability and faith. Parentage of DHL (75% holding) brings in best global practices in the company. We believe the company is well placed to be part of the high growth E-commerce market (40-50% CAGR FY13-15E). We also expect the company to benefit from increased requirement of corporates for prompt and reliable delivery and further gain market share in surface express.

We estimate BDE to deliver 13% earnings CAGR over FY13 to FY15E despite a tough economic scenario on the back of jump in revenue share of relatively profitable E-commerce segment, sustained 12-15% growth in Air express and increasing market share in the surface express industry. The stock trades at 24x FY15E EPS, a premium for its dominant market share, healthy growth rate, strong balance sheet and parentage of DHL. Its 5-yr average one year forward PE (x) multiple stands at 27x. Initiate with an Accumulate with a target price of Rs 2,620 at 27x FY15E EPS.

Source : Equity Bulls

Keywords