Recommendation From Couriers Sector
This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year.
GROWING AT EXPRESS SPEED : BLUE DART EXPRESS LTD.
HERE IS WHY
✓Robust distribution network
✓Leading air express service provider
✓Resilient performance in challenging times
Blue Dart Express Ltd. is a transportation and distribution company that operates through both air and road transport primarily in India. The company securely and reliably delivers consignments to over 35,000 locations in India. The company formed an alliance with DHL Express in 2002, and DHL Express (Singapore) Pte. Ltd. currently holds 75 per cent stake in the company. This has been a win-win situation for both. DHL is the leading international air express service provider while Blue Dart has the same status in India. The company has huge exposure covering over 220 countries and territories.
It offers an entire spectrum of distribution services including air express, freight forwarding, supply chain solutions and customs clearance. The company reported net sales of Rs 3,288 crore in FY21 compared to Rs 3,175 crore in FY20. That is a flat growth of nearly 3.5 per cent. The EBIDTA stood at Rs 707 crore in FY21 as against Rs 490 crore in the previous year. That is a growth of over 44 per cent. Also, the PAT stood at Rs 102 crore while it had faced net loss of Rs (42) crore in FY20. One of the reasons for being an industry leader has been its pace of adapting to a dynamic environment. During the ongoing pandemic it capitalized on going digital and 100 per cent collections were digital during this period.
Recently, it worked with a startup called Skye Air to flag off the first drone flight which was aligned with Telangana government’s ‘Medicine from the Sky’ project. A strong cash balance was witnessed with a growth of nearly 106 per cent on account of cash flows from operating activities increasing from Rs 364 crore in FY20 to Rs 750 crore in FY21. Net sales for the quarter ended June 2021 stood at almost Rs 866 crore. That is de-growth of 10.5 per cent on QoQ basis but a growth of 108 per cent on YoY basis. The EBITDA (exclusive of other income) was Rs 159 crore which saw a decline of 36 per cent QoQ but an increase of 474 per cent YoY.
The net profit number stood at Rs 31.3 crore, again a decline of 65 per cent QoQ but a rise of 125 per cent YoY. The ROE stood at 18.81 per cent while ROCE was higher at 22.71 per cent. The stock was trading at a TTM PE of 56.7. The debt-to-equity ratio was a bit high at 1.01. Blue Dart’s robust delivery network is backed by its six Boeing 757-200 freighter aircraft offering a payload of over 500 tonnes per night, a tremendous fleet of 11,122 vehicles as well as 2,113 facilities and hubs across 35,000+ locations. In FY22, the company is going to continue to focus on upgrading its infrastructure and digitised solutions to optimise man-technology combination.
India’s supply chain and logistics segments are one of the largest in the world, which is also dominated by many unorganised players. Blue Dart has been playing a major role in shaping the logistic sector of India. In today’s fast-moving India, security, speed and reliability have become the need of the hour. Logistics through air is becoming a popular choice for such delivery. This brings optimistic times for Blue Dart Express to capitalise the growing demand. Thus, we recommend our reader-investors to BUY the scrip.