Blue Dart Express

Blue Dart Express Q1FY25 Concall Summary

Business Updates

• The company has invested in the new hub and two new aircrafts during the year and the costs associated to that have hurt the profits on a sequential basis

Participants

ICICI Securities

360 One AMC

Motilal Oswal

Lucky Investment Managers

Emkay

Avendus SPARK

Emkay Investment Managers

Elara Capital

QnA

• The aircraft was capitalized in June 2023 and in this quarter this has reflected fully and thus impact of it is fully visible
• From utilization perspective the North East sector that has now been introduced is still not fully utilized. The inbounds are good to Guwahati but out bounds have not been good so far
• From a margin perspective the additional costs involved for the new hubs and the aircrafts that have come in will have an impact in initial years as costs get added earlier and optimum utilization takes time
• Also surface cargo is less profitable than air cargo
• The growth in surface cargo is higher than the growth in air cargo, which is putting a pressure on yields due to the margin difference between both the products. In addition to this the additional investments made for growth have added to the drop in margins
• The objective is to increase market share in surface express business but do so profitably
• From a strategy point of view pricing is never a criteria for acquiring business but if there is a key account that will become a long term customer initial pricing could be lower post which pricing is enhanced once service quality is displayed
• From surface express standpoint the cost is not much at hub level but at vehicle hire level and idea is not to dilute prices so that hub is utilized more as it will lower yields
• Last year there was no big investment into the hubs and this year two hubs have been invested into which is a capital intensive process
• Since H2 is heavier due to the festive season as well the outlook for H2 is better than H1
• The company has a fuel surcharge clause with its customers and that is linked to global brent oil prices and hence that neutralizes the impact of fuel in the total costs of the company