Why Blue Dart is a Logistics Stock to Watch Out For

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The recently inaugurated Mumbai Trans Harbour Link or Atal Setu is India's longest sea bridge.

Over 70,000 vehicles are expected to use Atal Setu every day. The bridge is likely to reduce the travel time from 1.5 hours to just 20 minutes. Atal Setu will ensure easy connectivity between Mumbai Port, Jawaharlal Nehru Port and Navi Mumbai Airport.Vehicles on Atal Setu can travel at 100 kms per hour. The bridge, which is the 12th longest globally, has been designed to withstand cyclones and earthquakes.

In short, the bridge has become the symbol of India's growing logistical prowess to back an accelerating economic landscape.Until a few years back, if you crossed inter-state borders, long queues of trucks loaded with cargo at gates of national highways were a familiar sight.

The key reason, of course, was the state specific duties in the pre-Goods and Service Tax (GST) era. But that wasn't the only reason.

A large part of the clearance delay was also because of documentation and cumbersome procedural bottlenecks.

In India getting goods to move from the source point to the destination has always been a seriously costly affair.

As per estimates logistics cost is around 13% to 14% of India's gross domestic product (GDP). This compares unfavorably with European countries where the logistics costs stand at about 8-9% of the GDP.

Since poor logistics network impacts inflation, export potential and quality of goods transported, the sector has witnessed massive investments and fiscal reforms over the past few years.

Initiatives like multi-modal connectivity, dedicated freight corridor, logistics parks, drone deliveries and e-commerce policies are expected to offer massive long-term tailwinds to key logistics players in the country.

To add to that the National Logistics Policy is expected to be a game changer.

However, we rarely think of India's cargo aviation companies when it comes to game changing logistics players.

India's top cargo aviation company Blue Dart Express caught my attention when it increased its fleet of Boeings last year.

Blue Dart has increased its aircraft fleet in India from six to eight by adding two Boeing 737 freighters in 2023. It has its own fleet of scheduled Boeing 757-200 freighter services offering a larger capacity than any other domestic airline in the country.

Besides this, it offers a host of value-added services such as cash on delivery, freight on delivery etc.

Further, it has added taken number of connected cities to eight.

The company is also working on a plan to deliver over 300-kg shipments using drones.

Blue Dart Express specialises in time-sensitive shipments, through an integrated ground and air transportation network.

The company commands greater than 50% of the market share in the organised Air Express segment. Also, it has been picking up market share in the Ground Express segment.

The Air Express and Ground Express segments contributed around 65% and 35% of revenues in financial year 2023.

The Ground Express segment is expected to grow at twice the rate of the Air Express segment. So, the company is looking to increase the share of ground express in its overall mix to better capitalise on the growth opportunity.

Over the past few years, Blue Dart has shown much higher resilience to economic shocks compared to its competitors.

Despite the challenging last few years of the pandemic, Blue Dart Express has managed to grow revenue through improved volumes and realisations.

Through its dedicated aircraft fleet service, its operations were not as severely impacted as pure road transporters during the pandemic.

The company's digitization initiatives and new customer additions will mean that the volume outlook remains healthy.

Also, a robust demand environment in the business-to-business (B2B) and business-to-consumer (B2C) segments bodes well for the company. Blue Dart expects to continue posting high double-digit volume growth with price hikes averaging 4-5%.

Backed by firm demand, the company's capacity utilization is now near its peak.

It plans to expand its air fleet capacity to meet demand requirements. The company is targeting to achieve two thirds of its revenue from air express cargo.

With the strong contribution of logistics players in India's economic maturity, Blue Dart Express is firmly poised to benefit from the tailwinds that the logistics sector has to offer over long term.

Check the financial profile of India's top logistics stocks on Equitymaster Screener.

Warm regards,


Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)