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Motilal Oswal Report
Blue Dart Express Ltd.'s revenue declined 4.3% YoY to ~Rs 12.4 billion in Q1 FY24 (estimate: Rs 13.2 billion). Blue Dart handled 0.28 million tonnes of cargo volumes (+2.6% YoY), while realisation dropped ~7% YoY to Rs 43.3/kg mainly due to a change in product mix and higher share of surface express.
Ebitda margin came in at 9.2% (versus our estimate of 11.0%). Ebitda declined 41% YoY to Rs 1.1 billion. Adjusted profit after tax dipped 49% YoY to Rs 598 million in Q1 FY24 (28% below estimate) due to weak operating performance.
Margins came in lower owing to subdued volumes and certain start-up costs related to addition of two new aircraft. The new aircraft started operations during June 2023 and became operational for the last 10 days of Q1 FY24.
The overall volume growth was muted due to weakness across the industry; however, volumes are likely to pick-up as festive season demand kicks in from Q2 FY24 onwards.
Going forward, volumes are expected to rise with improvement in overall industry sentiment and new aircraft being operational. We expect margins to gradually improve with better capacity utilisation and recent reduction in aviation turbine fuel prices.
We cut our Ebitda by ~7%/5% for FY24/25E respectively and reiterate our 'Buy' rating with a revised target price of Rs 7,840 (premised on 20 times FY25E enterprise value/Ebitda).
We believe that after the near-term challenges related to aircraft additions are over, margins could improve for Blue Dart. The long-term outlook remains robust.
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