Motilal Oswal Gives Buy Rating To This Small Cap Stock, Gave monthly, yearly, and 5 yearly positive returns

Leading brokerage firm Motilal Oswal in its latest report has given a buy call to the stock of Blue Dart Express Ltd.(BDE) for a potential gain of 12%. The current market price of the stock is Rs 6885 apiece and the target price is Rs 7,715 apiece. BDE has delivered a robust performance over the last several quarters, despite a steep rise in fuel prices.

It has been able to take adequate price increases, which helped maintain its robust margin. The cost control measures are playing out well, with BDE clocking a record high EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin.

1. Stock Outlook

The current market price of Blue Dart Express Ltd is Rs 6885.60 apiece. The 52-week high and 52-week low levels of the stock remained at Rs 7,814.55 apiece and Rs 5306.50 apiece, respectively.

The stock has given positive return of 13.87% in 3 months, positive return of 5.68 in 6 months, positive return of 15.57% in one year, and positive return of 60.35% in 5 years. According to Oswal, if you buy the stock at its current market price, you can potentially gain 12% with a target price of Rs 7.715 apiece.

Current Market Price	Target Price	Potential Gain
Rs 6885.60	Rs 7,715	12%

2. Capacity addition on cards

BDE ended FY22 with a volume growth of approximately 30% YoY at 932.7kt, led by strong growth in the e-commerce vertical, which now constitutes approximately 25% of the business. Other segments like document shipment have been performing well for BDE.

With the Education and BFSI sectors opening up, volumes are improving and have almost reached pre-COVID levels. With improved outlook and capacity utilization currently near its peak, BDE is actively looking to add one aircraft to its fleet.

3. Emphasis on boosting Surface Express share

A general price hike of approximately 9% was undertaken in Jan'22, based on customers and volumes handled. Average realization stood at 4-5%. Ground Express will benefit from the recent cut (approximately 7%) in diesel prices from the tax cuts announced in May'22. Cost efficiency measures (reduction of some low-profit pin codes from its network) are helping BDE generate a strong margin.

BDE is looking to increase its contribution from the Ground Express segment from current levels of 30-35%. The growth in Ground Express is expected to be 2x that in Air Express due to the cost differential between these services.

4. Valuation

According to Motilal Oswal, "BDE is seeing strong volume growth and the outlook remains robust. With utilization levels peaking, it is crucial for BDE to add an aircraft to its fleet. Margin is likely to stabilize at 14.5-15% levels. With decent volume growth and margin, we expect BDE to clock a revenue/EBITDA/PAT CAGR (compound annual growth rate) of approximately 13%/8%/6% over FY22-24. We maintain our Neutral rating, with a revised TP of INR7,715/share (21x FY24E EV/EBITDA)."

5. About Blue Dart Express Ltd

It has emerged South Asia's leading express air and integrated transportation and distribution company, as per its official website. offers secure and reliable delivery of consignments to over 35,000 locations in India.

Blue Dart accesses the largest and most comprehensive express and logistics network worldwide, covering over 220 countries and territories and offers an entire spectrum of distribution services including air express, freight forwarding, supply chain solutions and customs clearance. The current market capitalization of BDE as of writing this report is Rs 16,338 crore.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.