Oct 10, 2015 Industrials - Transportation & Logistics Blue Dart OctExpress 10, 2015 Ltd Blue Dart Express Ltd Bloomberg Code: BDE IN India Research - Stock Broking HOLD Premium Play on Indian Logistics with Domestic Cargo Jets Recommendation (Rs.) CMP (as on Oct 09, 2015) 7480 Revival in the economy and robust growth in the E-tailing to drive future Target Price 8299 growth of the company: Upside (%) 11 In the next two years, the revenue of the company is expected to grow at an Stock Information average rate of 22%. The company provides premium express services to the B2B Mkt Cap (Rs.mn/US$ mn) 177486 / 2742 customers through air and ground express services. Since 2012, India’s express 52-wk High/Low (Rs.) 7850 / 4800 delivery service is growing at CAGR of 15% and the momentum is expected to 3M Avg. daily volume (mn) 0.01 improve further going forward. E-tailing would be the key driving factor for the Beta (x) 1.01 further growth of the industry, growing at a CAGR of 35% to $20 Bn by 2020. The Sensex/Nifty 27079 / 8190 company is betting heavily on the E-commerce growth story by investing on setting O/S Shares(mn) 23.7 up hubs and E-fulfillment centers both in the major cities, Tier II and Tier III cities. Face Value (Rs.) 10.0 The E-commerce revenue contribution for the company has also grown significantly Shareholding Pattern (%) from just 9% in 2009 to 25% in 2015. Promoters 75.0 On the operational front, the company has been generating healthy growth in the FIIs 6.7 number of shipments and tonnage handling. It is also reporting strong cash flow from DIIs 6.0 operations, at Rs. 1535 Mn, growing at CAGR of ~13%. As a result, the company is Others 12.3 able to meet its working capital and capex requirements from the internal accruals. Stock Performance (%) Due to the asset light business model, the company is also delivering healthy 1M 3M 6M 12M returns with the RoCE of the company in FY15 was over 32% going forward, the RoCE is expected to improve to 42.5% in FY16E and further to 49.3% in FY17E. Absolute 6 22 5 42 Relative to Sensex 0 24 12 38 Valuation and Outlook Source: Bloomberg With expected average earnings growth for the next couple of years at 47% and Relative Performance* at PEG ratio of 1.34x, the market price appears to have factored-in most of these 150 strong positives of the company. At a current price of Rs. 7480, the stock is trading at a P/Ex of 63.9x on FY17E earnings and we thus assign “HOLD” rating for the 130 stock with a price target of Rs. 8299. 110 Key Risks 90 yy Economic slowdown. Oc t-14 Jan-15 Apr-15 Jul-15 Oc t-15 yyThird party risk is involved, as most of the assets of the company are on lease. Blue Dart Sensex Source: Bloomberg; *Index 100
Exhibit 1: Valuation Summary (Rs. Mn) YE Mar (Rs. Mn) FY13 * FY14 FY15 FY16E FY17E
Net Sales 21717 19383 22722 27148 33880 EBITDA 2688 1741 2242 3206 4540 EBITDA Margin (%) 12.4 9.0 9.9 11.8 13.4 Adj. Net Profit 1933 1226 1293 1901 2778 EPS (Rs.) 81.5 51.7 54.5 80.1 117.1 RoE (%) 29.2 18.8 27.2 51.9 53.2 Analyst Contact PE (x) 91.8 144.8 137.2 93.4 63.9 Source: Company, Karvy Research, *FY13 figures are for 15months (Jan 2012 - Mar 2013) Ajay Lakra
For private circulation only. For important information about Karvy’s rating system and other disclosures refer 040 - 3321 6271 to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY
1 Oct 10, 2015 Blue Dart Express Ltd
Company Financial Snapshot (Y/E Mar) Company Background Profit & Loss (Rs. Mn) Blue Dart Express is India’s premier courier and integrated FY15 FY16E FY17E express logistics company, providing Air and Ground express Net sales 22722 27148 33880 services to its diverse customers from all industry verticals in Optg. Exp (Adj for OI) 20479 23941 29340 over 34000 locations in India. Currently, the company operates with five aircrafts (B-757) covering seven stations and over EBITDA 2242 3206 4540 8100 express support vehicles. It has over 582 retail stores Depreciation 436 435 506 with a dedicated workforce of over 9969 blue darters. Being Interest 112 311 311 a part of DHL group, a premier global brand in the express Other Income 246 200 180 distribution services, it has access to the largest and most PBT 1941 2660 3902 comprehensive express and logistics network worldwide, Tax 669 798 1171 covering over 220 countries and territories. Its unique product Adj. PAT 1293 1901 2778 offerings for different services with integrated solution give Profit & Loss Ratios the company an edge over its peers and helped it to retain its EBITDA margin (%) 9.9 11.8 13.4 leadership position. The company enjoy ~52% market share in Net margin (%) 5.7 7.0 8.2 air express and ~14.5% market share in the ground express P/E (x) 137.2 93.4 63.9 (2013). It has two subsidiary companies, Concorde air logistics and Blue Dart Aviation, both engaged in supporting the overall EV/EBITDA (x) 79.9 55.9 39.0 business of the company. Dividend yield (%) 0.3 0.3 0.4 Source: Company, Karvy Research
Balance sheet (Rs. Mn) Cash Flow (Rs. Mn) FY15 FY16E FY17E FY15 FY16E FY17E
Total Assets 9881 10866 13504 PBT 1941 2660 3902 Net Fixed assets 1705 1951 2175 Depreciation 436 435 506 Current assets 5370 5549 7937 Interest 112 311 311 Other assets 2806 3367 3393 Tax (755) (814) (1194) Total Liabilities 9881 10866 13504 Changes in WC (113) (408) 243 Networth 3073 4258 6179 Others (87) (129) (96) Debt 3322 3322 3322 CF from Operations 1535 2055 3673 Current Liabilities 3237 3013 3696 Capex (598) (600) (650) Other Liabilities & provisions 250 273 308 Others 917 (390) 120 CF from Investing 319 (990) (530) Balance Sheet Ratios Change in Debt 3322 0 0 RoE (%) 27.2 51.9 53.2 Dividends (4465) (715) (858) RoCE (%) 32.0 42.5 49.3 Interest (112) (311) (311) Net Debt/Equity 0.1 0.4 0.1 CF from Financing (1255) (1026) (1169) Equity/Total Assets 13.4 18.3 22.8 Change in Cash 598 39 1974 P/BV (x) 57.8 41.7 28.7 Source: Company, Karvy Research Source: Company, Karvy Research Exhibit 2: Shareholding Pattern (%) Exhibit 3: Revenue Segmentation (%) FIIs 6.7% Ground Express 20%
DIIs Promoters 6.0% 75.0% Others 12.3% Air Express 80%
Source: BSE, Karvy Research Source: Company, Karvy Research
2 Oct 10, 2015 Blue Dart Express Ltd Leadership position in India’s express logistics services with robust infrastructure facilities across the country Company holds largest market share in India’s Air Express The company enjoys leadership position in India’s air express industry with a market share of ~52%. It is the only company in India to operate domestic cargo jets, making it the preferred choice in comparison to its rivals who have to rely on the cargo space of any commercial carriers. It has two subsidiary companies, Concorde Air Logistics and Blue Dart Aviation, which dedicatedly involve in servicing the air express business of Blue Dart Express. Exhibit 4: Leadership Position in Air Express Market Blue Dart Aviation: The company has 5 aircrafts (B-757), offering a payload of over 385 tonnes per night across 60 routes. It is further planning to add Others Competitor 3 13.6% one more aircraft which will increase the company air cargo handling 8.5% capacity. The company takes all these aircraft on lease; this makes the company asset light and thus higher RoCE. The company has been Competitor 2 Blue Dart consistently posting excellent technical dispatch reliability and in FY15, 10.9% 52.0% it stood at 99.63%. Blue Dart Express has recently acquired additional 25% stake, for Rs. 540 mn, in Blue Dart Aviation and increased its holding Competitor 1 15.0% to 74%. Blue Dart Express is the only customer to whom the company provides exclusive services through its operation of night operations. Source: Company, Karvy Research Concorde Air Logistics: It is a wholly owned subsidiary of Blue Dart Express, delicately engaged in the services of clearing, forwarding of time sensitive cargo packages. Concorde Air Logistics is a registered air cargo agent with the International Air Transport Association (IATA) and licensed Custom House Agent (CHA) under the provisions of Customs Act, 1962. It also has Break-bulk license to handle consolidated shipments. All these keep the company ahead of any of its peers, as it facilitates its customers with the quick clearance of the shipment from the customs.
Gaining Market Share in the Ground Express Exhibit 5: 15% In the last couple of years, the company has gradually increasing its 14.5% market share from 5.9% in 2006 to 14.5% in 2013. Meanwhile, the revenue 10% contribution from the ground express has also grown for the company and is contributing 20% and the balance 80% is from air express. The 5% company follows hub-and-spoke model to provide seamless services to 5.9% its customers. It has over 79 express hubs and 582 retail outlets, including the retail outlets of DHL express, helping its committed 9969 blue darters 0% 2006 2013 giving quality services.
Source: Company, Karvy Research Company to maintain leadership position on the back of strong infrastructure and pan India network Exhibit 6: Over the years, the company has developed strong infrastructure and Warehouses 477 continue to invest in strengthening its capacity and reach. Currently, the Area (000 Sq. Feet) 2570 company has 477 facilities with a total area of 25,70,076 sq. ft. spread Retail Outlets 582 across the country, including 14 central processing units for e-commerce Employees 9969 shipments. The air express infrastructure includes five aircrafts, operating Express Support Vehicles 8185 in seven stations, Chennai, Kolkata, Bangalore, Delhi, Hyderabad, Domestic Locations serviced 34000+ Mumbai, and Ahmedabad -- in all the stations, the company has bonded Countries and Territories serviced 220+ warehouses for custom clearances. The air express service of the Air Network Infrastructure company is supported by the robust surface line covering more than Flights (B-757s) 5 34,000 locations. The company currently has over 8185 express support Network Stations 7 vehicles with ~9969 blue darter (employees) giving seamless support to Daily dedicated capacity (tons) 385 the company’s premium air express business and point-to-point surface Source: Company, Karvy Research services to its customers. 3 Oct 10, 2015 Blue Dart Express Ltd Setting up E-fulfillment centers to benefit from e-commerce Exhibit 7: In FY15, the company has also setup its first E-fulfillment center in 200 Gurgaon in 140,000 sq ft area. Going forward, the company is planning to set up similar centers in Bangalore and Mumbai. It is also planning 150
176 to set up 13 to 15 smaller centers in the tier II and III cities. Bangalore 100 facility is expected to be built up on around 100000 sq. ft. Here again, the 132
98 company is following asset light model by taking the land and building on 50 73 lease and incurring expenditure on infrastructure, technology and lifting 40 54 0 29 equipments. The capex incurred for the Gurgaon facility was in the range of 2014 2015E 2016E 2017E 2018E 2019E 2020E Rs. 80-100 mn and the company is expecting to incure the similar amount E-Fulfilment (US$ Bn) for its Bangalore and Mumbai facilities. For the facilities in the tier II and III
Source: Company, Karvy Research cities, the estimated cost is in the range of Rs. 50–60 mn. The setting up of E-fulfillment centers would open-up new business opportunity for the company in terms of inventory management, labeling and supply chain solution for the business enterprises. E-fulfillment business in india is pegged at US$ 28.6 bn in 2014 and it is expected to grow at a CAGR of 35% to US$ 176.2 bn by 2020. Overall, the company is planning to invest Rs. 600 mn to 650 mn in building the infrastructure and expanding into smaller cities. Wide-range of product Mix to help optimal utilization of the infrastructure and improve margins
Exhibit 8: Customer Segmentation (%) The company provides premium logistics services to wide range of industries in both B2B and B2C (E-Commerce) categories. It services industries like banks, financial services, insurance, high-end consumer B2C 25% durables, healthcare and E-commerce. Apart from the domestic market, the company also services its international business through DHL, its holding company. The international business accounts for 8% of the total revenue. As the company services wide range of industries and companies,
B2B the business of the company is not dependent on any particular industry 75% or company. Currently, the B2B business accounts for 75% of the total business and the remaining 25% is from the B2C business. Going forward, the contribution from the B2C is expected to improve with the company’s Source: Company, Karvy Research focus on the E-commerce business.
4 Oct 10, 2015 Blue Dart Express Ltd
In the last many years, the company has built up strong portfolio of services and has been developing new products to service its varied customers requirements. In the express industry, the key responsibility of the company is to make door-to-door delivery on the defined time and day. Following is the table showing industry requirements and the services offered by the company.
Robust growth in the E-commerce business to drive future revenue growth of the company Exhibit 9: Growth in e-commerce & e-tailing ($ Bn) The overall E-commerce business in india is growing at a CAGR of ~34% 25 since 2009 to $16.4 bn in 2014. During the same period, the e-tailing market has grown faster than the overall industry growth at ~54% CAGR at 20 $3.5 bn in 2014. The contribution of e-tailing has also increased from 11% 21.3 15 in 2009 to 21% in 2014. As per the estimates of the Internet and Mobile
10 16.4
6.0 Association of India (IAMAI), parcel check-outs in e-commerce portals 12.6 3.5
2.3 exceeded 100 Mn in 2013, but is still less than 1% of the total retail sales in 9.5
5 1.5 1.0 0.6 0.4 7.0 5.3 the country. As per the industry estimates, the e-tailing in India is expected 3.8 0 to grow at a CAGR of 35% to $20 bn by 2020. Higher usage of internet for 2009 2010 2011 2012 2013 2014 2015E E-Commerce E-Tailing the purchases of consumer durables, apparels, accessories, books etc to
Source: Industry, Assocham, Karvy Research drive future growth. Internet usage in India as percentage of total population in the country is very low at 19% as compared to U.S and China, where the penetration is around 87% and 46% respectively. However, the internet usage is fast growing both in the urban and rural india. Exhibit 10: Share of eTail in Indian retail (%) Exhibit 11: Commodity distribution in E-tailing (%)
100% Body Products 80% 2% Electronics
91.6% Healthcare 34% 60% 83.0% 3%
40% Home & Apparels & Furnishing Accessories 20% 14.0% 6% 8.0% 30% 3.0% 0.4% Beauty & 0% personal 10% 2014 2020 Books 15% Independent retail Brick and mortar retail eTail
Source: Industry, Karvy Research Source: Industry, Karvy Research
5 Oct 10, 2015 Blue Dart Express Ltd
Exhibit 12: Low internet penetration as percentage of population Exhibit 13: Geographical distribution of internet users in India (Mn) 100% 220
80% 216 165 86%
60% 87% 138
110 165
40% 130 53%
59% 92 46% 55 99 20% 60 38 0% 19% 0 US Japan Russia Brazil China India Jun-12 Jun-13 Jun-14 Jun -15E Internet penetration as % of population (2014) Urban Rural
Source: Industry, Karvy Research Source: Industry, Karvy Research
Exhibit 14: Contribution from B2C is growing fast 25% 25.0% So far, the robust growth in the E-commerce has also helped the company’s 20% overall revenue growth. The revenue contribution from the E-commerce 15% (B2C) business has increased from 0.9% in FY09 to 25% in FY15. The 10% company is betting heavily on the E-commerce business for its future growth prospects. It has already tied-up with most of the e-commerce 5% 0.9% portals like ebay, snapdeal, flipkart and started setting up of e-fulfillment 0% centers both in the major cities, Tier II, III cites and towns. Dec-09 Mar-15
Source: Company, Karvy Research
Revival in the economy to drive growth of express delivery services Exhibit 15: Real GDP Growth Rate (%) 8 8.0 7.9 The empirical study shows that air express delivery services grow at 1.5 to 7.5
6 7.3
6.9 1.9 times of the GDP growth and the ground express services grow at 2 to 4 2.5 times the GDP growth. Thus the future growth of the express industry
5.1 would be directly dependent on the revival in the economy. As per the World 2 Bank estimates, the Indian economy is expected to grow around 8% in
0 FY16E and FY17E. The key industries which would drive the future growth 2012 2013 2014 2015 2016E 2017E are the manufacturing, retail, FMCG and e-commerce sectors. Real GDP Growth Rate (%)
Source: World Bank, Karvy Research
Exhibit 16: India’s EDS Market Size (Rs. Mn) Exhibit 17: EDS Organized and unorganised Market Share (%) 168000
126000 167296 Organized 52% 84000 110000 42000 Unorganized 71000 0 48% 2006 2012 2015 Express Delivery Service (EDS) Market Size (Rs. Mn)
Source: Express Industry Council of India (EICI), CARE, Karvy Research Source: EICI, CARE and Karvy Research
6 Oct 10, 2015 Blue Dart Express Ltd
Exhibit 18: Air Express market size (Rs. Bn) Exhibit 19: Ground Express market size (Rs. Mn) 40 20 60 25 18.7 12.4 19.6 19.0 14.7 19.2 18.7 13.2 12.8 20 30 15 40 13.2 15 20 10 10 20 10 5 5 24.0 28.7 34.2 40.6 48.3 20.4 23.4 26.5 29.9 33.6 0 0 0 0 2011 2012E 2013E 2014E 2015E 2011 2012E 2013E 2014E 2015E Air express market size (Rs. Bn) Ground express market size (Rs. Mn) Growth Rate (%) (RHS) Growth Rate (%) (RHS)
Source: Company, Karvy Research Source: Company, Karvy Research
Government Initiatives
Implementation of GST (Goods and Services Tax) would lead to rationalization of tax: This would result into smooth movement of goods between the states. Furthermore, the implementation of uniform billing system and advance infrastructure are expected to result into better implementation of the benefit of tax credit and bring in supply chain efficiency. Make-in-India Initiatives: to improve disposable income and increase consumption expenditure.
7 Oct 10, 2015 Blue Dart Express Ltd
Exhibit 20: Business Assumptions Y/E Mar (Rs. Mn) FY14 FY15 FY16E FY17E Comments Consolidated In the next two years, the revenue of the company is expeted to grow at an average rate of 22% on the back of increase in the number of shipments and tonnage handling. Going forward, the key Revenue 19383 22722 27148 33880 revenue growth driver would be the E-commerce business which is fast growing. Setting up of e-fulfillment centers would further contribute to the revenue growth of the company. Revenue Growth (%) (10.7) 17.2 19.5 24.8 Revival in the economy and optimal mix of EBITDA 1741 2242 3206 4540 premium services would lead to improvement in the operating profit margin of the company. EBITDA Margins (%) 9.0 9.9 11.8 13.4 Higher asset utilization along with higher sales PAT 1226 1293 1901 2778 and improvement in the operating profit margin to drive net profit growth. PAT Growth (%) (36.6) 5.5 47.0 46.2 Fully Diluted EPS (Rs.) 51.7 54.5 80.1 117.1 Fully Diluted EPS Growth (%) (36.6) 5.5 47.0 46.2 The company is investing on setting up of Capex (ex. Acquisition) - cash capex (303) (598) (600) (650) e-fulfillment centers, hubs and expanding into tier II, tier III cities and towns. Net CFO 1201 1535 2055 3673 Net Debt (1059) 1665 1626 (348) Free Cash Flow 898 936 1455 3023 Source: Company, Karvy Research
Exhibit 21: Karvy vs Consensus Karvy Consensus Divergence (%) Comments Revenues (Rs. Mn)
FY16E 27148 27310 (0.6)
FY17E 33880 33271 1.8 EBITDA (Rs. Mn)
FY16E 3206 3172 1.1 We expect higher EBITDA margin in FY17E on the back of growing contribution from FY17E 4540 4024 12.8 E-commerce and better mix of premium service offerings. EPS (Rs.)
FY16E 80.1 82.1 (2.4) We expect no debt raising by the company in the FY17E 117.1 106.6 9.8 near future, thus stable interest charges.
Source: Bloomberg, Karvy Research
8 Oct 10, 2015 Blue Dart Express Ltd
Exhibit 22: Revenue Growth (%) 40000 60% 45% 25%
30000 40% 19% Since FY11, the revenue of the company is growing at a CAGR of 15%, 17% 20000 33880 20% on the back of improvemnet in the revenue per shipment and revenue per
27148 tonnage. Similar trend in the top line is expected to continue on the back 22722 10000 21717 0%
19383 of revival in the economy and robust growth in the E-tailing business. Thus -11% 0 -20% we expect the revenue to growth at a CAGR of 22% for the next two years. FY13 FY14 FY15 FY16E FY17E Revenue (Rs. Mn) Growth (%)
Source: Company, Karvy Research
Exhibit 23: Shipments and tonnage handling on rise 800 The company has been reporting healthy growth in both shipments of 600 778 cargo and tonnage handling on the back of robust infrastructure and strong 648 594
400 559 pan India presence. Since FY09, the company’s shipments have grown at 513
196 a CAGR of 13% while the tonnage handling has grown at a CAGR of 16%. 164 142 141 200 127 Meanwhile, the company has also witnessed rising trend in the revenue per shipment and revenue per tonnage. Similar trend is likely to continue 0 FY13 FY14 FY15 FY16E FY17E going forward and would drive the revenue growth of the company. Shipments (Mn) Tonnage ('000)
Source: Company, Karvy Research
Exhibit 24: EBITDA and EBITDA margin (%) 5000 15 12.4 11.8 13.4 9.9 Better product mix and higher utilization on the back of improving macro 4000 9.0
4540 10 economics are expected to improve the EBITDA margins of the company. 3000 The company has adoped innovative and customer friendly mechanisms
2000 3206 5 like Currency Adjustment Factor (CAF), Fuel Surcharge Mechanism (FSM) 2688
1000 2242 and Diesel Surcharge Mechanism (DSM) for hedging fluctuation in fuel 1741 0 0 price and currency to certain extent. In the near term, EBITDA margin (%) FY13 FY14 FY15 FY16E FY17E is expected to be in the range of 12% to 13%. EBITDA (Rs. Mn) EBITDA margin (%)
Source: Company, Karvy Research
Exhibit 25: Net Profit and Net profit Margin (%)
3000 8.9 8.2 10 7.0 6.3 5.7 8
2000 2778 5 The net profit of the company is expected to grow at an average rate of 1933 1000 1901 47% in ther next two years. Improvement in EBITDA margin (%) and higher 3 1293 1226 utilization are expected to drive the bottom-line. 0 0 FY13 FY14 FY15 FY16E FY17E Net Profit (Rs. Mn) Net profit margin (%)
Source: Company, Karvy Research
9 Oct 10, 2015 Blue Dart Express Ltd
Exhibit 26: Healthy Return on Investment 60 41.4 49.3 40 32.0 28.3 42.5 Over the years, the company has been reporting healthy return on investment on the back of asset light business model. Going forward, 20 similar trend is likely to continue with the improving business climate. In FY15, the company has issued bonus debentures to its shareholders and 0 as a result, the RoE has jumped significantly in FY16E and FY17E. FY13 FY14 FY15 FY16E FY17E RoA (%) RoE (%) RoCE (%)
Source: Company, Karvy Research
Exhibit 27: Healthy NCFO and Low Debt (Rs. Mn) 4000 1.0 The company has been generating healthy cash from its operating activities and as a result, it has been meeting its working capital and capex 3000 0.5 requirements from its internal accruals. In FY15, the company has issued 2000 debentures as a bonus to its shareholders aggregating to Rs. 3322 Mn. 0.0 1000 The debentures were issued in three different series - Series I redeemable in November 2017, Series II redeemable in November 2018 and Series III 0 -0.5 redeemable in November 2019. All the ongoing expansion is expected to FY13 FY14 FY15 FY16E FY17E be financed from the internal accruals, and thus there is no additional loan Total Debt NCFO D/E Ratio requirement expected for the company.
Source: Company, Karvy Research
Exhibit 28: Company Snapshot (Ratings) Low High 1 2 3 4 5 Quality of Earnings 33 Domestic Sales 33 Exports 33 Net Debt/Equity 33 Working Capital Requirement 33 Quality of Management 33 Depth of Management 33 Promoter 33 Corporate Governance 33 Source: Company, Karvy Research
10 Oct 10, 2015 Blue Dart Express Ltd Valuation & Outlook
The company enjoys leadership position in India’s express logistics industry (52.0% market share in air express and 14.5% market share in ground express) with well established infrastructure for both air and ground express services. It provides multi- modal express services to its customers through it air and ground network giving them point-to-point services. It also offers wide variety of premium services for time and temperature sensitive cargo and secure delivery. All these factors make the company preferred choice for any express delivery services. Moreover, the company has strong balance sheet with very low debt. Over the years, the company has been generating healthy cash flow from its operations making it self-sufficient to meet its working capital and capex requirements. Due to the asset light business model, the company has also reported robust RoCE (32.0% in FY15) and RoE (27.0% in FY15) and similar trend is likely to continue going forward. With expected average earnings growth for the next couple of years at 47% and at PEG ratio of 1.34x, the market price appears to have factored-in most of these strong positives of the company. At a current price of Rs. 7480, the stock is trading at a P/Ex of 63.9x on FY17E earnings and we thus assign “HOLD” rating for the stock with a price target of Rs. 8299.
Exhibit 29: PE Band Exhibit 30: PB Band 200 80
150 60
100 40
50 20
0 0 13 13 14 15 12 15 14 14 13 13 14 15 12 15 14 14 ------Oct Apr Jan Jun Sep Oct Apr Jan Jun Mar Sep Aug Nov Mar Aug Nov P/E Average STDEV1 P/B Average STDEV1 STDEV2 ~-1STDEV STDEV2 ~-1STDEV
Source: Prowess, Karvy Research Source: Prowess, Karvy Research
Exhibit 31: EV/EBITDA 100 80 60 40 20 0 13 14 15 13 13 14 14 15 15 12 12 13 13 13 13 13 14 14 14 14 14 15 15 15 12 13 13 14 14 15 13 13 14 14 15 15 ------Jul Jul Jul Oct Apr Oct Apr Oct Apr Jan Jun Jan Jun Jan Jun Feb Feb Feb Sep Sep Sep Mar Mar Mar Nov Dec Aug Nov Dec Aug Nov Dec Aug May May May
EV / PBDITA Average STDEV1 STDEV2 ~-1STDEV
Source: Prowess, Karvy Research
Exhibit 32 (a): Comparative Valuation Summary Mcap EV/EBITDA (x) P/E (x) EPS (Rs.) CMP (Rs.) (Rs. Mn) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E Blue Dart Express 7480 177486 79.9 55.9 39.0 137.2 93.4 63.9 54.5 80.1 117.1 Gati Ltd 158 13843 16.9 14.9 8.7 33.6 28.3 12.8 4.7 5.6 12.4 Source: Respective companies, Karvy Research
Exhibit 32 (b): Comparative Operational Metrics Summary CAGR % (FY15-17E) RoE (%) Price Perf (%) Net Sales (Rs. Mn) Sales EBITDA EPS FY15 FY16E FY17E 3m 6m 12m FY15 FY16E FY17E Blue Dart Express 22.1 42.3 46.6 27.2 51.9 53.2 20.7 4.3 43.3 22722 27148 33880 Gati Ltd 14.0 44.8 62.3 5.0 6.1 12.4 (16.2) (36.4) (18.5) 16382 17512 21292 Source: Respective companies, Karvy Research
11 Oct 10, 2015 Blue Dart Express Ltd
Key Risks yyEconomic slowdown. yyThird party risk is involved as most of the assets of the company are on lease. yySignificant fluctuation in currency and fuel prices.
12 Oct 10, 2015 Blue Dart Express Ltd
Financials
Exhibit 33: Income Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Revenues 21717 19383 22722 27148 33880 Growth (%) 45.2 (10.7) 17.2 19.5 24.8 Operating Expenses 19029 17642 20479 23941 29340 EBITDA 2688 1741 2242 3206 4540 Growth (%) 49.5 (35.2) 28.8 43.0 41.6 Depreciation & Amortization 347 273 436 435 506 Other Income 400 377 246 200 180 EBIT 2741 1845 2053 2972 4214 Interest Expenses 0 0 112 311 311 PBT 2741 1845 1941 2660 3902 Tax 834 635 669 798 1171 Adjusted PAT 1933 1226 1293 1901 2778 Growth (%) 55.6 (36.6) 5.5 47.0 46.2 Source: Company, Karvy Research
Exhibit 34: Balance Sheet YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Cash & Cash Equivalents 2417 1064 1663 1696 3670 Sundry Debtors 2272 2667 2910 3017 3365 Inventory 24 27 40 38 42 Loans & Advances 3233 3030 2540 2642 2764 Investments 228 243 265 843 890 Gross Block 3341 3517 3018 3618 4268 Net Block 1828 1880 1705 1951 2175 Miscellaneous 507 490 759 679 598 Total Assets 10507 9402 9881 10866 13504 Current Liabilities & Provisions 3634 2704 3237 3013 3696 Debt 0 0 3322 3322 3322 Other Liabilities 274 269 250 273 308 Total Liabilities 3908 2973 6809 6608 7325 Shareholders Equity 238 238 238 238 238 Reserves & Surplus 6362 6192 2835 4021 5941 Total Networth 6599 6430 3073 4258 6179 Total Networth & Liabilities 10507 9402 9881 10866 13504 Source: Company, Karvy Research
13 Oct 10, 2015 Blue Dart Express Ltd
Exhibit 35: Cash Flow Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E PBT 2741 1845 1941 2660 3902 Depreciation 347 273 436 435 506 Interest 0 0 112 311 311 Tax Paid (882) (612) (755) (814) (1194) Inc/dec in Net WC (167) 94 (113) (408) 243 Other (215) (399) (87) (129) (96) Cash flow from operating activities 1825 1201 1535 2055 3673 Inc/dec in capital expenditure (418) (272) (597) (600) (650) Inc/dec in investments 279 325 693 (579) (46) Others 384 332 223 189 166 Cash flow from investing activities 246 385 319 (990) (530) Inc/dec in borrowings 0 0 3322 0 0 Dividend paid (55) (2943) (4465) (715) (858) Interest paid (0) (0) (112) (311) (311) Cash flow from financing activities (55) (2943) (1255) (1026) (1169) Net change in cash 2016 (1357) 598 39 1974 Source: Company, Karvy Research
Exhibit 36: Key Ratios YE Mar FY13 FY14 FY15 FY16E FY17E EBITDA Margin (%) 12.4 9.0 9.9 11.8 13.4 EBIT Margin (%) 12.6 9.5 9.0 10.9 12.4 Net Profit Margin (%) 8.9 6.3 5.7 7.0 8.2 Dividend Payout Ratio (%) 87.2 96.8 36.7 31.2 25.6 Net Debt/Equity (0.2) (0.3) 0.1 0.4 0.1 RoE (%) 29.2 18.8 27.2 51.9 53.2 RoCE (%) 41.4 28.3 32.0 42.5 49.3 Source: Company, Karvy Research
Exhibit 37: Valuation Parameters YE Mar FY13 FY14 FY15 FY16E FY17E EPS (Rs.) 81.5 51.7 54.5 80.1 117.1 DPS (Rs.) 71.0 50.0 20.0 25.0 30.0 BV (Rs.) 278.1 271.0 129.5 179.5 260.4 PE (x) 91.8 144.8 137.2 93.4 63.9 P/BV (x) 26.9 27.6 57.8 41.7 28.7 EV/EBITDA (x) 65.1 101.3 79.9 55.9 39.0 EV/Sales (x) 8.1 9.1 7.9 6.6 5.2 Source: Company, Karvy Research
14 Oct 10, 2015 Blue Dart Express Ltd
Stock Ratings Absolute Returns Buy : > 15% Hold : 5-15% Sell : <5%
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