Management Meet Update: Blue Dart Express - ACCUMULATE - TP Rs.4375 - Kotak

- Shrinking business in the B2B segment, increasing competition and slowing business from the ecommerce segment has been impacting the performance of BDE since few quarters. We see this as a result of structural change in both the B2B (digitization and competition) and B2C (consolidation and captive network for e-commerce companies). We believe that a fresh strategy of Mckinsey, implementation of GST, a strong brand name which stands for reliability and a strong distribution network is expected to provide impetus for BDE in the medium term. Despite hiccups, we expect revenues for the company to grow at 6% CAGR, EBIDTA margin to sustain at ~11.5% and earnings to grow at 16% CAGR over FY17 to FY19E. We believe that BDE continue to remain as one of the key stocks to invest in the courier space.

- The stocks' premium valuation of 47.3x FY19E earnings is a concern which makes us believe that the stock would underperform the market, unless growth visibility improves. We revised our earnings downward and downgrade the stock to ACCUMULATE (from BUY) with a target price of Rs 4375 (from Rs 4860).

Shares of BLUE DART EXPRESS LTD. was last trading in BSE at Rs.4113.15 as compared to the previous close of Rs. 4130.45. The total number of shares traded during the day was 4941 in over 86 trades.

The stock hit an intraday high of Rs. 4141 and intraday low of 4085.7. The net turnover during the day was Rs. 20399458.

Source : Equity Bulls

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