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Blue Dart Express Q2 Results Review - Lower Realisation, Higher Costs Dent Margins: ICICI Securities

We believe intensifying competition in the price-sensitive market is likely to pose the major headwinds for the company.

<div class="paragraphs"><p>A Blue-Dart delivery van. (Source: Company website)</p></div>
A Blue-Dart delivery van. (Source: Company website)

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ICICI Securities Report

Blue Dart Express Ltd.’s Q2 FY23 performance was a slight miss on consensus estimates owing to higher costs. Key points:

  1. the number of shipments rose ~25% YoY to 81 million, possibly due to higher share of road cargoes;

  2. realisation/shipment contracted to Rs 164/shipment as against Rs 173/shipment in Q2 FY22 and Rs 168/shipment in Q1 FY23;

  3. gross margin/kg contracted ~26% YoY due to lower realisation/shipment and higher costs; and

  4. consolidated Ebitda margin shrank to 16.7% (lowest since Q2 FY21) due to negative price-cost effect.

Going ahead, we will keep a close tab on-

  1. fleet augmentation, which has the potential to increase Blue Dart’s penetration in tier-II cities and

  2. efficacy of the recently announced price hikes (to be effective January 2023).

That said, we believe intensifying competition in the price-sensitive market is likely to pose the major headwinds for the company, likely resulting in incremental volumes coming at progressively narrower margins.

Click on the attachment to read the full report:

ICICI Securities Blue Dart Q2FY23 Results Review.pdf

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