Analyst Corner: Reiterate ‘sell’ on Blue Dart as headwinds will sustain

Two recent events have generated significant interest for air express players, global belly cargo capacity has remarkably reduced and, on some routes, air freight rates have increased by 30-60%. Due diligence suggests that rates have gone up in India by 7-15% — a hope-inducing factor for Blue Dart Express (BDE) given its operating leverage. Recent DHL commentary highlights the Covid-19 vaccine distribution scope that may open up for the air express industry. Researchers have also estimated that 15,000 flights would be needed to ensure global distribution of the vaccine in two years. This presents a scope for the Indian express and 3PL players. These two events have resulted in salience for Indian air express, particularly BDE. Reiterate ‘sell’ on BDE as structural headwinds of the model will sustain.