Result Update: Bluedart Express Ltd - ACCUMULATE - TP Rs.2875 - Kotak

Bluedart has reported mix set of numbers for Q2FY19, with strong topline growth, but weak EBIDTA margin. Revival in B2B segment, healthy B2C segment and strong growth in the E-com segment led to double digit YoY volume growth. While aggressive PAN India expansion and rising fuel cost dented the margins.

Key Highlights

- Sales was ahead of expectation at Rs 7.98 bn (+13.5% YoY) with double digit YoY volume growth achieved by the company with 1) Rapid expansion of operations PAN India (from 7000 pin codes to 18000 pin codes in one year) 2) Hint of recovery in the key B2B segment for BDE and 3) Strong growth in the E-COM segment.

- However, operational performance of the company was under pressure on account of increase in Freight (including fuel). Freight and handling cost was high for the company during the quarter at Rs 5.39bn (+21.8% YoY) primarily due to increasing fuel prices, which we believe the company was not able to pass on to customers completely. The employee cost and other cost were also higher during the quarter at Rs 1.39 bn (+23% YoY) and Rs 801 mn (+12.8% YoY) respectively as the company is expanding PAN India which involves manpower and administrative cost. The company now have offices/agents/franchises in 18000 pin codes PAN India (vs.7000 pin codes YoY in Tier 1 and Tier 2 cities)

- Other income/depreciation cost and interest cost were stable for the company. Lower tax provisioning net of tax adjustment of prior period supported the PAT. Consequently, company reported PAT of Rs 210 mn (-35.7% YoY) which was below our expectation of Rs 292 mn.

Shares of BLUE DART EXPRESS LTD. was last trading in BSE at Rs.2800.25 as compared to the previous close of Rs. 2769.8. The total number of shares traded during the day was 808 in over 121 trades.

The stock hit an intraday high of Rs. 2876 and intraday low of 2778.05. The net turnover during the day was Rs. 2299335.

Source : Equity Bulls

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