BlueDart gets a 'Buy' after revival of B2B, B2C biz

Experts and analysts have suggested Buy for the BlueDart shares at Rs 6,300, ugraded from 2100 earlier following a revival in its B2C and B2B segments and a continued expansion in margins, along with strengthening of FCF.

BlueDart has been reporting a stellar uptick in performance post Q1, registering revenue growth of 8 per cent and 21 per cent YoY in Q2 and Q3, respectively. Shift in consumer buying behaviour and consumption patterns, led to higher growth in the B2C and B2B segments.

Due to the strong growth, the utilisation of assets remained high, that is, more than 85 per cent. The revenue performance was further assisted by expansion in EBITDA margins by 1,880 bps and 780 bps to 26.4 per cent and 24.3 per cent in Q2 and Q3, to yield an absolute EBITDA of Rs 229 crore (up three times YoY) and Rs 252 crore (up 77 per cent YoY), respectively.

The company was able to maintain its EBITDA margins at 24-26 per cent, led by cost efficiencies and higher operating leverage. BlueDart has also acquired two Boeing 757-200 aircraft to derive economic value in the long run, according to an analytical report from the ICICI Direct research group.

BlueDart has been a beneficiary of flight to quality trend post Q1, which resulted in higher tonnage growth, backed by greater digital connect with customers and focus on servicing bigger customers and brands.

On the B2C segment, healthy growth returned to its fold, further shoring up the company strategy to participate in only profitable orders.

(Source: ICICI Direct Research)