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Blue Dart : Not out of the woods yet - Views on News from Equitymaster
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Blue Dart : Not out of the woods yet
Jul 15, 2009

Performance summary
  • Standalone topline of the company declines by 14.9% YoY during the quarter mainly on account of lower fuel surcharge.
  • Operating profits decline by 39.7% YoY, thus causing a fall in operating margins by 4.1%, mainly on account of higher operating costs.
  • Bottomline declines by 44.8% led by contraction at operating level and higher depreciation charges.
  • Half yearly net profits declines by 55% YoY on the back of 13.7% YoY decline in topline.


Consolidated Financials
(Rs m) 2QCY08 2QCY09 Change 1HCY08 1HCY09 Change
Net sales 2,446 2,083 -14.9% 4,843 4,179 -13.7%
Expenditure 2,101 1,874 -10.8% 4,011 3,761 -6.2%
Operating profit (EBDITA) 345 208 -39.7% 832 417 -49.9%
EBDITA margin (%) 14.1% 10.0% 17.2% 10.0%
Other income 10 12 16.0% 19 26 34.7%
Interest (net) - - - -
Depreciation 41 47 13.4% 80 91 13.1%
Profit before tax 314 173 -44.8% 771 352 -54.3%
Tax 107 59 -44.9% 257.00 121 -52.9%
Profit after tax/(loss) 207 114 -44.8% 514 231 -55.0%
Net profit margin (%) 8.5% 5.5% 10.6% 5.5%
No. of shares (m) 23.7 23.7 23.7 23.7
Diluted earnings per share (Rs)* 20.7
Price to earnings ratio (x)** 23.9
Price to earnings ratio (x)** , (* annualised, ** on trailing twelve months earnings)

What has driven performance in 1QCY09?
  • The standalone topline of the company declined by 15% mainly on account of lower fuel surcharge due to lower crude oil prices during the quarter as compared to corresponding period last year. Fuel surcharge accounted for around 18% decline in the topline, however core business activity (i.e. parcels and tonnages) grew by around 3% on the back of some revival in the economy during the quarter. Thus, net impact on the topline was a decline of 15% in 2QCY09.

  • The operating margins contracted by 4.1% to 10% during the quarter as the decline in operating cost was lower as compared to topline decline. This was mainly on account of increase in all the costs heads viz freight handling & servicing costs, staff cost and other expenditure ( as a % sales) during the quarter. It may be noted that the company had recently inducted a new aircraft and it is also expanding its ground services by establishing warehouses, offices across the country. Thus as a result, fixed costs of the company have gone upwards, putting a pressure on the margins.

    Cost break-up…
    (Rs m) 2QCY08 2QCY09 Change 1HCY08 1HCY09 Change
    Freight handling & servicing costs 1,594 1,374 -13.8% 3,051 2,764 -9.4%
    % sales 65.2% 66.0% 63.0% 66.2%
    Staff cost 307 309 0.5% 595 619 3.9%
    % sales 12.6% 14.8% 12.3% 14.8%
    Other expenditure 200 192 -4.2% 365 379 3.7%
    % sales 8.2% 9.2% 7.5% 9.1%

  • The bottomline decline at 44.8% YoY came greater than decline in topline mainly on account of contraction at operating levels coupled with higher depreciation charges during the quarter.

What to expect?
At the current price of Rs 499, the stock is trading at a P/E multiple of 24x its trailing twelve month earnings. The company’s performance has come in way below our expectations wherein the topline and bottomline for first half of the year are lower by 32% and 53% as compared to our projections. Thus, we will be revising our estimates lower and come up with a revised target price.

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