Report Date July 15, 2006

Company Name Blue Dart Express (BDEL)

Price / Recommendation Rs. 466.05 HOLD
Original Recommendation Price & Date Rs 377/- May 16, 2005
Sector Courier Services Q2 CY 2006 Result Overview
One Year Target Price Rs. 600/-
Ø Net Sales grew @ 21.7% to Rs 157.4 crore.
Market Capitalisation Rs. 1107.47 crore Ø OPM% declined slightly to 16.71% from 16.9%.
52–week range Rs. 316 - 705 Ø PBT (before extraordinary items) grew @ 24.4% to
Shares in issue (mio.) 23.73 Rs. 21.1 crore (Rs. 17 crore).
BSE Ticker 526612 Ø However, one time expenses of Rs. 2.32 crore and
NSE Ticker BLUEDART substantially higher average tax rate of 41% restricted
BSE Sensex 10678.22 growth in PAT of Rs. 11.1 crore to just 6.7%
Future Prospects
Shareholding Pattern on Mar. 2006 Ø There is possibility that BDEL could be made a
% regional hub after evaluating overall economics of
Promoters 81.03%
DHL’s costs / revenues and BDEL’s cost structure.
FIIs 0.37%
MFs / UTI 11.18% Ø Induction of 2 Boeing freighters has enhanced
Banks / FIs 0.00% BDEL’s air capacity to 250 tonnes per night across
Others 7.42% 60 route connections, giving it major market edge in
this time critical express market. Variable cost of
Price Performance (%) running these aircraft would be just 0.6-0.7 (x) cost of
1M 6M 12M flying old aircrafts, thereby improving profitabilty.
Absolute 23% -19% 4%
Ø Has set up 7th Aviation hub in Ahmedabad to provide
Relative to BSE
Sensex 3% -33% -45% more efficient and faster connectivity to growing
industries like the Pharma, Dyes & Chemicals, and
Relative Performance (Chart) Textile in Ahmedabad, Baroda and Surat.
Blue Dart relative to Sensex Valuation
160.0

150.0
Ø At CMP, the stock trades at 13.7 times CY 2006
140.0

130.0
expected consolidated EPS of Rs.33.9 and 9.6 times
Relative Index

120.0 CY 2007 expected consolidated earnings of Rs.48.5

110.0

100.0
We recommend to HOLD the stock in view of the
90.0 good growth prospects.
80.0
Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06
Dates

Blue Dart Sensex

Financial Summary
Rs in crore
For Year ending December Q2 2006 Q2 2005 H1 2006 H1 2005 2005 A* 2006 E 2007 E
Service Income 157.4 129.4 309.4 250.8 415.1 670.6 818.1
% Change 21.7% 23.4% 21.2% 22.0%
EBITDA 26.4 22.2 57.6 43.6 78.8 118.6 152.9
% Change 19.3% 32.1% 13.0% 28.9%
EBITDA (%) 16.7% 16.9% 18.4% 16.9% 18.8% 17.5% 18.5%
Interest Expenses / (Income) 0.4 0.7 1.0 1.4 2.3 1.6 (1.1)
Depreciation 4.9 4.4 9.5 8.8 13.1 19.5 21.2
P.B.T. 21.1 17.0 47.1 33.4 63.4 97.5 132.8
PAT 11.1 10.4 29.3 20.0 43.4 62.1 86.9
% Change 6.7% 46.9% 7.3% 39.8%
Consolidated Net Profit 44.4 80.7 115.3
% Change 36.3% 42.9%
Annualised Consolidated EPS (Rs) 23.9 33.9 48.5
Equity Capital (Rs 10/- paid up) 23.8 23.8 23.8
Book Value (Rs) 85.4 115.9 158.8
RONW (%) 31.0% 33.7% 35.3%
ROCE (%) 46.1% 55.8% 68.7%
P/E (x) 19.5 13.7 9.6
 …2
-2-

Q2 CY 2006 Result
Ø Net Sales grew @ 21.7% to Rs 157.4 crore.
Ø OPM% declined slightly to 16.71% from 16.9%. This was because of spurt in Freight, handling & servicing
cost to 63.2% (60.3%) of operating income as it includes Rs. 4.09 crore on account of introduction of
aircrafts in the fleet.
Ø PBT (before extraordinary items) grew @ 24.4% to Rs. 21.1 crore (Rs. 17 crore).
Ø However, one time expenses of Rs. 2.32 crore for inducting new aircrafts and substantially higher average
tax rate of 41% restricted growth in PAT of Rs. 11.1 crore to just 6.7%
H1 CY 2006 Result
Ø Net Sales grew @ 23.4% to Rs 309.4 crore (Rs. 250.8 crore).
Ø OPM% improved to 18.4% (16.9%) with drop in Staff cost to 13.5% (16%) of Income from Operations.
Ø Strong sales growth coupled with improved profitability resulted in PBT (before extraordinary items)
soaring up by 41% to Rs. 47.1 crore (Rs. 33.42 crore)
Ø After accounting for lower extra ordinary expenses of Rs. 2.32 crore (Rs. 3.2 crore - extraordinary income
of Rs. 3.6 crore on account of profit on disinvestments of 60% holding in Blue Dart Aviation and
extraordinary expense of Rs.6.8 crore due to one-time retention compensation payable to the then Managing
Director) PAT was up by 46.9% to Rs 29.3 crore (Rs. 19.9 crore).

Future Prospects
Ø DHL will continue to invest in India as a core growth market. DHL expects growth in India to come from
auto, computers, chips and textiles, which are sourced increasingly from India and will need seamless time
sensitive supply chain (strong domain of DHL). Towards this end, there is possibility that BDEL could be
made a regional hub after evaluating overall economics of DHL’s costs / revenues and BDEL’s cost
structure. At present, BDEL does 15% of international traffic route channeling for DHL. This business could
grow in future with company being made hub.
Ø Company is focused on strengthening and expanding its air infrastructure to support India's economic growth
and increasing demand for distribution. Hence, two 28 tonnes freighters have been inducted taking total air
capacity to 250 tonnes per night across 60 route connections. This enhanced capability has given the
company a major edge in time-critical express market making it the only express service provider in the
country having capability to accommodate such large volumes and dimensions on its aircraft. Variable cost
(like fuel, airport landing and other charges and saving on cost of crew) of flying such aircraft can be just
0.6-0.7 (x) cost of flying old aircrafts. This would improve overall profitability of the company.
Ø Gujarat is one of the rapidly growing markets and there are many developmental activities going on in ports
and infrastructure sectors of the state. To participate in this growing market, company has set up 7th Aviation
hub in Ahmedabad. This would enable company to provide more efficient and faster connectivity to growing
industries like Pharma, Dyes & Chemicals and Textile in Ahmedabad, Baroda and Surat.
Ø However, concern regarding Indian Post Office Bill ’06 monopolising delivery of documents and letters
below 300 gms to postal department still remains. There is no action on the proposed postal bill so
far. . So, status quo is continuing.
Recommendation
Ø At CMP, stock trades at 13.7 times CY 2006 expected consolidated EPS of Rs.33.9 and 9.6 times CY 2007
expected consolidated earnings of Rs.48.5

Ø Going ahead, topline is expected to grow @ CAGR of 20% (+), while bottomline (with improved
profitability) would grow @ ~ 30%. In view of decent future prospects, we recommend to “HOLD” stock.

Disclosures
Ø The author may have held / hold the above-mentioned securities in their personal accounts or on behalf of the
clients. The information contained has been obtained from sources believed to be reliable. While taking
utmost care in making the report, the authors or the company does not take responsibility for the
consequences of the report. All investment, information and opinion are subject to change without notice.
The investment recommendations may not be suitable to all the investors.