Blue Dart Analyst Sees Limited Downside Despite 'Underwhelming' Q3 Numbers

Brokerage firm ICICI Securities in a research note noted that the Blue Dart stock is down by about 19% in the last three months and said that "the downside will be limited as risks seem to have been priced in."

The Blue Dart Analyst: Analysts at ICICI Securities led by Amit Dixit upgraded their rating from "sell" to "reduce," and lowered the target price from ₹6,748 to ₹6,340.

The Blue Dart Thesis: While the company saw an increase of about 6.5% year-over-year in sales, its profit took a 28.2% YoY hit to reach ₹88.66 crore in the third quarter.

The brokerage firm noted that the company's Q3 results missed its and the street’s estimations by 13% and 14%, respectively. 

The firm attributes the underwhelming performance to high operating costs. According to the analysts, the company's profits were eaten by the expensive aviation fuel costs and high employee costs. 

ICICI Securities said it looks forward to the price hikes announced by the logistics company, which took effect this January. The analysts remain cautiously positive about the company's expansion plans, which will see them acquiring two Boeing 737-800 freighters and opening "100 new stores across India to enhance its coverage."

On the other hand, the firm does expect competition in the sector to increase which would put pressure on the company's financials. It also sees "stubbornly high" aviation fuel costs as a major downside going forward.

Seeing the stock’s current market price of around ₹6700, ICICI Securities observed that "the stock is trading at the lower band of its past eight years range, suggesting limited downside from CMP," as it enhanced the rating to "reduce."

Price Action: Blue Dart was trading around 1.6% lower at ₹6636 in the afternoon hours of trading on Friday.