ICICI Securities maintains a BUY recommendation on Blackbuck, the new age logistics company, with a revised target price of Rs 775 per share. Despite a recent sharp stock run-up of 55% in six months which has moderated the risk-reward ratio, Blackbuck's robust core business growth and promising expansion in newer verticals are driving optimism. The company's Q2FY26 results surpassed expectations with 37% year-on-year revenue growth, led by tolling and telematics segments. However, a moderate dip in EBITDA due to increased investments and salary increments introduces caution.

Q2FY26 Performance Overview

Revenue Growth: Blackbuck posted Rs 1.5 billion in revenue, reflecting a 53% year-over-year surge and 5.2% quarter-over-quarter rise, outperforming estimates. Core business sectors—tolling and telematics—grew 36.7% YoY to Rs 1.2 billion, while growth verticals, including Superloads and vehicle financing, skyrocketed by 226.2% YoY. Average Monthly Active Truck Operators: The user base expanded 13.2% YoY, indicating solid traction in the platform’s adoption. EBITDA and Profitability: Adjusted EBITDA clocked in at Rs 426 million but declined 9.6% QoQ due to strategic reinvestment, pushing margins down to 28.2% from 32.9%. PAT stood at Rs 292 million, down 13.4% from the previous quarter mainly due to lower EBITDA.

Strategic Business Insights

Tolling Market Share Expansion: Blackbuck increased its market footprint in the tolling business to 50% in Q2FY26, supported by industry tailwinds such as national highway expansions and toll rate inflation (~3-5% annually), which are expected to sustain 25% YoY growth in this segment. Fuel Sensor Sales Surge: Sales in this segment, driven by non-regulatory but customer demand factors, soared 55% QoQ, signaling strong upsell and cross-sell potential within the existing customer base. Superloads Expansion Drive: With proven success in Bengaluru and Hyderabad hubs, Blackbuck plans to ramp up Superloads operations to 14 hubs over six months, targeting India’s identified 50-100 key industrial-commercial hubs. Break-even typically occurs within two months post-launch in new cities.

Valuation and Price Target

Buy Recommendation Maintained: ICICI Securities upholds its Buy stance, raising the 12-month target price to Rs 775, based on a three-stage discounted cash flow (DCF) valuation model rolled forward by six months. This target implies a one-year forward EV/EBITDA multiple of around 40x, justified by the company’s robust growth visibility. Current Market Price Context: At the current market price of Rs 666, the stock offers upside potential of approximately 16.5%. However, the recent run-up has somewhat diminished the margin of safety, making entry timing more critical for investors.

Financial Projections and Key Metrics

Financials project sustained robust growth with EBITDA margins expanding to 37.5% by FY28, supported by operational leverage and increasing scale. Earnings per share are expected to increase strongly, leading to a sharp fall in the PE multiple over this period.

Operational Highlights and Market Position

Market Leadership in Digitised Loads: Blackbuck commands a 90% share in digitised loads and 78% in total FTL offline digitised volumes, reinforcing its dominant positioning in India’s logistics tech space. Load Pricing Variability: The average load realization currently stands at Rs 50,000, with broker margins between 8-10%, although pricing exhibits heterogeneity of up to 20% even on identical lanes based on material type and truck availability. Container Truck Representation: Container trucks make up around 40-50% of loads managed on classifieds and Superloads, especially in key markets like Bengaluru. Though container fleet adoption was initially slower due to early legacy platform affiliations, growth constraints are not anticipated from container supply.

Risks to Outlook

There are key risks that could derail the bullish thesis: - Regulatory headwinds impacting the core tolling business and constraining newer business expansion. - Execution risk around scaling high-growth sub-segments like Superloads and fuel sensors amid market competition. - Potential slowdown in the logistics sector triggered by geopolitical tensions or muted consumption demand.

Investment Levels and Targets

Entry and Target Levels: Investors looking to build or add positions may consider accumulation in the Rs 640-660 band, offering a strategic entry considering recent stock appreciation. Immediate Resistance and Targets: The stock faces initial resistance near Rs 720, with the target price set at Rs 775 over the next 12 months, implying upside potential of over 15%. Stop Loss Recommendation: A prudent stop-loss at Rs 620 is advised to manage downside risk in case of adverse developments.

Bottomline

ICICI Securities presents a compelling case for Blackbuck as a worthy buy in India’s logistics technology milieu. The company's stellar revenue growth, expanding market share in both core and emerging segments, and strategic investments underline a promising trajectory. However, investors must weigh the recent price run-up and margin pressure against the strong fundamental growth outlook. With a robust target price of Rs 775 and clear risk management levels, Blackbuck remains an attractive portfolio addition for growth-oriented investors looking to capitalize on the digitisation wave in logistics.