Blue Dart Express

Blue Dart Express enjoys a strong presence in courier & integrated express package distribution space and offers attractive investment opportunities

  

BLUE Dart Express, which is currently 81.03% controlled by DHL Express Singapore, is a leading player in South Asia for courier and integrated express package distribution. It was promoted in 1983 by Clyde Cooper, Tushar Jani and Kushroo Dubash and DHL Express (Singapore) took a majority stake in the company in 2005. 

   The current upturn in the domestic economy over the last few quarters is expected to help Blue Dart Express and other players in the logistics segment, to transport increased volumes of packages. In addition, the company's brand Blue Dart is well recognised and as per various estimates, it helps the company get better realisations vis-à-vis other players in its segment. Blue Dart Express was also debt-free at the end of its financial year of December '08 and has strong cash flows to fund its organic growth. Investors with a medium- to long-term investment horizon can consider this stock.

LOGISTICS NETWORK :

Blue Dart Express follows an integrated business model and the company's fleet of four Boeing 757s and three B737 freighter aircraft are operated by Blue Dart Aviation, an associate company. Besides, Blue Dart Express also had over 5,658 vehicles and 350 combined retail counters, and over 12.2 lakh square feet of facility space at the end of December '08. The company provided delivery of consignments to over 21,000 locations across the country and to over 220 countries world-wide through its sales alliance with DHL Express (India) at the end of CY08. The company invested, on a standalone basis, Rs 108.4 crore between December '06 and December '08, while its cash flow during this period was a healthy Rs 199.7 crore.

FINANCIALS :

The upturn in the domestic economy, coupled with a pick-up in global demand helped Blue Dart Express' operating profit margin improve by 420 basis points y-o-y to 14.2% in the December '09 quarter, while its net sales rose 10.6 % y-o-y to Rs 253.5 crore. 

   However, the sluggish operating environment in the country and overseas during the first half of CY09 had a mixed impact on the company. For instance, Blue Dart Express handled 77 million shipments in the domestic market during CY09, as compared to over 79 million a year earlier. In the international segment too, the number of shipments handled was 0.66 million in CY09, compared to over 0.7 million a year earlier. Nevertheless, the total tonnage handled by the company amounted to 2.67 lakh

tonnes in CY09, as compared to over 2.31 lakh tonnes a year earlier. The company appears well-positioned for the current upturn in the domestic economy with the number of domestic locations served at over 25,392 at the end of February '10.

VALUATIONS:

Blue Dart Express, at Rs 734.85, trades at 28.7 times on a trailing fourquarter basis. Although, not strictly comparable, but the largest domestic logistics player Container Corp trades at nearly 21.7 times on a trailing basis, while Allcargo Global trades at 16.5 times on a consolidated basis. However, given the strong position enjoyed by Blue Dart Express in the courier and integrated express package distribution, investors can consider this stock with a medium- to long-term horizon.