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YES Securities
Blue Dart Express (Sell)
Target ₹1,420,
CMP: ₹1,978.10
Blue Dart reported 47.2 per cent y-o-y decline in revenues during Q1-FY21 largely impacted by Covid-19 related lockdown. The revenue decline was due to a similar decline in volumes while realisation remained largely stagnant. During the quarter, volumes were driven by higher share of packages while document shipments were lower. As several offices were shut during lockdown shipment of documents was severely impacted.
The company has provided 20-25 per cent discount on shipments related to medical equipment’s. The company has levied emergency situations surcharge on certain shipments to offset the low capacity utilisation which supported realisations to some extent. However, the sharp drop in volumes, saw the company report loss at operating level.
We expect utilisation to reach pre-Covid levels by start of H2-FY21. We, however, continue to believe that Air express would grow at much slower pace than surface cargo. Also, Blue Dart’s market share in Surface express is likely to increase gradually with higher competition in the industry.
This would continue to impact the overall growth in near to medium term.
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