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Motilal Oswal Report
Blue Dart Express Ltd. has announced price hikes ranging from 9% to 12%, effective January 2025. This would help cover several inflationary costs and maintain its margin profile. With improved demand, Blue Dart expects the price hike to be comfortably passed on to its customers.
As the festival season kicks in, capacity utilisation of its new aircraft is anticipated to pick up. As the aircraft reach optimal utilisation levels, efficiency will improve, leading to higher margins. New routes, such as Guwahati, are starting to ramp up and should pick up pace in the coming quarters.
Blue Dart continues to expand in the surface express segment, which forms 30% of its total revenues. The surface express segment is likely to be a key growth driver for Blue Dart as it is expected to grow faster than the air segment.
Volumes are projected to improve with the onset of the festive season as the new aircraft are stabilising and routes like Guwahati have been added to the network.
Ebitda margin has started to expand as capacity utilisation has improved and Blue Dart has shifted some volumes from the third-party cargo to its own aircraft.
We reiterate our Buy rating with a revised target price of Rs 9,900 (based on 21times FY27E Enterprise value/Ebitda).
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