EUR 120.00 For Business Accounts Only

MOSL: BLUE DART EXPRESS – ANNUAL REPORT UPDATE: Well placed to capitalize (BDE IN, Mkt Cap USD2.4b, CMP INR8130, TP INR8200, 1% Upside, Neutral)

BDE enjoys market leadership in the Air Express segment, continues to focus on the high growth e-commerce space

• BDE enjoys ~54% market share in the organized Air Express segment as of FY21 and has been picking up market share in the Surface Express segment.
• e-commerce is a key vertical for the company and constitutes roughly one-fourth of its revenue. BDE saw strong growth in this segment in FY22.
• The e-commerce market witnessed a surge in growth, with consumers and businesses ordering everything from groceries to consumer durables online. As per a Ken Research report, the Indian e-commerce Logistics industry is expected to grow to INR493b by FY25, at a CAGR of 23.6% over FY20-25.
• BDE provides the most efficient solutions to the e-commerce industry such as enablement of digital payments through 16 digital wallets on courier handheld machines, apart from acceptance of credit and debit cards.
• BDE expects e-commerce to be a key growth driver over the next few years.

Regular price hikes and improved volumes have ensured strong margin, despite an increase in fuel cost

• BDE runs a dedicated fleet of cargo aircraft between the seven airports that it operates from. Aviation Turbine Fuel (ATF) accounts for ~40% of direct operating costs for an Express Logistics airline.
• Despite a steep rise in ATF prices in FY22, BDE was able to maintain gross margin at 36% in FY22.
• BDE has an internal hedging mechanism, termed as a fuel surcharge mechanism, for passing on the rise or fall in ATF costs to its customers.
• Also, the sharp rise in volumes during FY22 (+30% YoY) has helped BDE to maintain its margin performance.

 

Focus on technology has helped BDE remain competitive in the market

• Technology and digitalization have always helped BDE remain a step ahead of the curve in a highly competitive industry. The company continues to offer contact less deliveries (CLD), which was made possible by activating various digital wallets, net banking, credit and debit cards, UPI, B-QR code, etc.
• Breakthrough initiatives like delivering Medicine from the Sky: BDE and its partners supported the ‘Medicine from the Sky’ initiative. Under this initiative, it leveraged the use of drone flights through the Blue Dart Med-Express consortium to enable pickups and deliveries of mission-critical shipments in the remotest areas of India. These Unmanned Aircraft Systems, or drones, can even handle BDE’s specialized Temperature Controlled Shipments with a payload of up to 5kg.
• BDE has enhanced its application programming interface (API) based solutions for its customers. This allows exchange of detailed manifest to ensure an automated and seamless supply chain, from pre-pick up to post-delivery, inclusive of collections.