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IDBI Capital
Blue Dart (Sell)
CMP: ₹4,763.80
Target: ₹3,132
Key highlights: a) Management expects that the pickup in volume growth is expected to begin from Q3FY15 and consistent growth expected in FY16. Management also expects margin improvement in FY16; b) Blue Dart currently has about 40 per cent market share in the e-commerce business; c) The business works on cash delivery basis (about 60 per cent is “cash on delivery” mode). Management says that cash on delivery involves more complicated transaction and more efforts. Therefore, company charges premium for e-commerce segment as compared with ground segment and it is also better margin accretive business than others; d) E-commerce companies currently operate 30-40 per cent of the shipments through their in-house logistics, which is majorly catering to large cities. Management believes that distribution through vast network is the need of the hour and Blue Dart scores over other in terms of its wide network coverage. The E-commerce is a key growth driver for Blue Dart Express. We continue to remain positive on the company’s growth prospects over the longer term due to the wide reach, strong back-end and market leadership in air express segment. However, considering the rich valuations, we maintain our ‘Sell’ rating with a target price of ₹3,132.
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