Buy Blue Dart Express; target of Rs 7500: Motilal Oswal

Buy

Motilal Oswal's research report on Blue Dart Express

Air express logistics companies benefit significantly from a reduction in the prices of aviation turbine fuel (ATF) as ATF costs account for 35-45% of their total operating costs. ATF price declined 6% MoM (-12% YoY) in Apr’25 to INR83,575/kl. A decline in ATF prices translates into lower per-flight operating expenses, leading to immediate improvements in EBITDA and operating margins. For a company like Blue Dart Express (BDE), which operates a fixed schedule of flights daily, these savings are realized at scale and can meaningfully enhance profitability. Moreover, reduced ATF prices contribute to higher aircraft utilization, as operating additional routes or increasing flight frequency becomes more cost-effective. This not only enhances the return on fixed assets like aircraft, but also allows the company to grow its network without proportionally increasing its cost base.

Outlook

With lower ATF prices and its annual general price increase, we expect BDE’s margins to improve going forward. Volumes are projected to improve as new aircraft are stabilizing and routes like Guwahati have been added to the network. EBITDA margin has started to expand as capacity utilization has improved and BDE has shifted some volumes from the third-party cargo to its own aircraft. We reiterate our BUY rating with a TP of INR7,500 (based on 18x FY27E EV/EBITDA).

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Blue Dart Express - 23042025 - moti