Fundamental Analysis of Blue Dart Express: Have you ever wondered how many parcels are delivered every second? Or which is one of the biggest industries in the world? How do documents and couriers reach destinations? There is one industry that answers these questions- logistics.
In this article on Fundamental Analysis of Blue Dart Express, we shall cover the company’s business, its financials, its competitive advantage, and more. Keep reading to find out.
What is logistics?
Logistics is the overall process of planning, managing, and executing the efficient transportation of goods from one place to another. Most businesses have logistics involved in their work. However, businesses like Amazon and Flipkart are relatable.
Some of these businesses have their own logistics networks, while others outsource this function of their business.
Fundamental Analysis of Blue Dart Express
Industry Overview
India’s logistics industry has to face a variety of challenges. Thanks to its geographic presence and the second largest population in the world. The country has one of the highest road densities in Asia, however, the quality of roads is subpar as compared to many developing countries.
Attempts are being made to improve the roads and the transport industry is consolidating with smaller unorganized players dropping out of the market, and organized players gaining ground.
The pandemic had two key impacts on the industry. First, on warehousing and second on transportation. Ordering and maintaining appropriate quantities of inventory stored in warehouses became more challenging.
Moreover, traditional forecasting methods became ineffective. In fact, formal and technologically capable organizations are better armored to take up larger challenges from the ever-growing domestic and international economic scene.
The size of the Indian logistics market was around 250 billion US dollars in FY21. It was estimated that it would grow to 380 billion dollars in 2025, at a compound annual growth rate between 10 to 12 percent. However, India has a higher logistics cost as a percentage of GDP at 14 percent, compared to the BRICS average of 11 percent.
About Blue Dart Express
Think of time-sensitive shipments, think of Blue Dart Express! Many people believe that this Indian courier service provider is an international company. Thanks to its brand colors and logo! Blue Dart Express is South Asia’s premier express air and integrated transportation & distribution company.
It offers secure and reliable delivery of consignments to over 35,000 locations in India. In fact, it delivers 24 parcels every second!
It is a part of the DPDHL Group’s (DHL Express, DHL Global Forwarding & DHL Supply Chain) Post – E-commerce – Parcel (PeP) division. As a result, Blue Dart Express gets access to the largest and most comprehensive express and logistics network worldwide.
This network covers almost all the countries across the globe. Further, it offers a wide spectrum of distribution services including air express, freight forwarding, supply chain solutions, and customs clearance.
The company has:
- a countrywide surface network to complement their air services.
- warehouses at 85 locations in India
- bonded warehouses in Ahmedabad, Bangalore, Chennai, Delhi, Mumbai, Kolkata, and Hyderabad.
- a dedicated capacity to support their time-definite morning deliveries through night freighter flight operations.
Services
Blue Dart Express enables deliveries at predefined times for critical shipments such as passports, tenders, and original papers/certificates. In addition, it provides industry-specific services. This includes temperature-controlled logistics for its customers in life sciences and healthcare as well as thermal packaging.
Further, it provides cargo solutions like the airport to airport, interline, and charters. The company enabled 16 digital wallets on the hand-held courier machines apart from accepting credit/ debit cards during the lockdown to ensure contactless delivery.
Awards and Recognition
Blue Dart Express is a market leader and delivers unmatched standards of service quality. Thanks to its motivated workforce, dedicated air and ground capacity, cutting-edge technology, a wide range of innovative, vertical-specific products, and value-added services.
Here are a few awards and recognitions that it has received:
- ‘India’s Best Companies to Work For by The Great Place to Work® Institute
- the Top 25 Best Employers in India 2016 by AON Hewitt
- Fortune 500’s India’s Largest Corporations
- Forbes India’s Super 50 Companies
- Reader’s Digest’s Most Trusted Brand
Blue Dart Express – DHL Relationship
Blue Dart Express and DHL signed a Sales Alliance Agreement on 12th September 2002. This alliance was further strengthened in 2005 when DHL Express (Singapore) Pte. LTD. acquired an 81.03% stake in Blue Dart Express.
DHL is the world’s leading express and logistics company. It combines worldwide coverage with an in-depth understanding of local markets.
Thanks to its global expertise in solutions, express, air and ocean freight, and overland transport. The company’s harmonized international network links more than 220 countries and territories worldwide.
DHL Express is the No.1 international air express services provider in India. On the other hand, Blue Dart Express is the leader in the air express industry in India.
The coming together of these companies is a win-win relationship that benefits all the stakeholders. Moreover, it provides both organizations with the flexibility to grow their individual businesses unhindered.
Blue Dart Express – Moat
Blue Dart Express is a defensive stock. This means that it provides consistent dividends and stable earnings regardless of the state of the overall stock market. Sometimes they tend to outperform the market in adverse situations.
There is a constant demand for logistics, therefore the scrip tends to be very stable. Such stocks can be used for hedging.
The company is linked by some of the most advanced communication systems. Further, it is positioned to offer a consistent premium and standardized quality of service.
They are the only express carrier in India to offer a wide range of services. Customers can send a document as well as a charter load of shipments.
A dedicated team of specialists provides the expertise for customs as well as regulatory clearances at all states within the country.
It carries packages as its prime business, rather than a by-product of a passenger airline.
Blue Dart Express’ services are self-sustaining. They have their own bonded warehouses, ground handling, and maintenance capability.
Blue Dart Express – Financials
Blue Dart Express Limited is a large-cap company with a market capitalization of over 20,000 crores.
Its sales, as well as net profits, show an increasing trend over a period of five years. When we take a look at its balance sheets for the mentioned period, we find that its debt has been decreasing.
Further, it has a high return on capital employed at 40.82% and a moderate return on assets at 13.51%. Its net profit margin shows an increasing trend.
The company has a price-to-book value of 18.65. This means that the company’s shares are currently trading at a premium to their book value.
| Particulars | Value |
|---|---|
| Face Value (₹) | 10 |
| EPS (₹) | 197.96 |
| ROE (%) | 43.83 |
| Debt to Equity | 0.23 |
| Current Ratio | 0.85 |
| Market Cap (₹ in Cr.) | 22964 |
| Promoter’s Holdings (%) | 75 |
| Dividend Yield (%) | 0.7 |
| Stock P/E (TTM) | 43.39 |
| Sector PE | 54.14 |
| Net Profit Margin | 8.66 |
Strengths
- Blue Dart Express Limited has an ideal debt-to-equity ratio, between 0 and 1.
- It has a very high return on equity of 43.83% and is a large-cap company.
- The company has very high promoter holdings of 75%. This stake is held by DHL Express (Singapore) Pte. LTD.
- Blue Dart Express’ PE ratio is lower than that of the sector. Therefore, it is favorable for the business as well as investors. It could mean that the stock is undervalued.
Weaknesses
The company’s current ratio is lower than 1 which means that its current assets are lower than its current liabilities.
Blue Dart Express – Future prospects
The company wants to focus on its core domestic products and expand its market share. It is looking forward to expanding its market share and consolidating its unique and premium position in the industry.
Further, it plans to leverage its established infrastructure to continue adding value and customized solutions to the changing and evolving demands of the customer.
The company wants to carve a leadership position in the industry as India’s and the region’s link to the world. For this, it will continue to differentiate itself in all areas of its core competencies – supply chain management, logistics, and e-commerce.
Blue Dart Express has successfully commenced Visual Line of Sight trials of drone delivery in Hyderabad under the “Medicine from Sky” project of the Telangana Government in September 2021. Moreover, Skye Air Mobility, an Indian Drone Delivery startup firm, was a part of the consortium that worked on the project.
In Closing
In this article, we took a look at the Fundamental Analysis of Blue Dart Express. It is a large-cap logistics company listed in India. We took at the industry that it functions in, the services it provides, and its relation with DHL. Further, we took a look at financials, future prospects, and sustainability.
That’s all for this article folks and happy investing until next time!
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