Blue Dart Express shares jump 67% in 45 days, could the logistics major deliver more returns?

Logistics major, Blue Dart Express has seen its share price surge 67% in a little over one month. With this jump in stock prices, Blue Dart Express shares have now recovered all their since March and even scaled higher to trade at fresh 52-week high valuations. However, that might not be the end of the road for the stock. Analysts at ICICI Direct believe that Blue Dart Express shares have the potential to gain further and reach a target price of Rs 3,710 per share in the next six months. Currently the stock is trading at Rs 3,1320 per share.

Technical take

On the technical side, Blue Dart Express registered a resolute breakout above the bullish rounding formation of the last seven months signalling a reversal of the corrective trend and resumption of fresh up move, ICICI Direct said. This could pose as a fresh entry position for investors. “During the current month, the stock has witnessed its highest monthly volume since April 2011 highlighting accumulation at the major support area,” they added. The up move in the stock has seen it retrace its 24-week decline from Rs 3,071 per share to Rs 1,873 in just seven weeks which analysts say signals a structural turnaround.

Market leader

Blue Dart Express has a market capitalization of Rs 7,484 crore and its total debt at the end of the previous fiscal year stood at Rs 410 crore with cash position at Rs 100 crore in the same period. With a pan-India reach the company services 14,400 pin codes in India against the total of 19,500. The ICICI Direct report highlighted that the parent company DHL — a global logistics market leader — regards the Indian subsidiary as part of its core strategy to capture the fast growing Indian express logistics market. Blue Dart maintains 45% share in the air express distribution, which contributes around 78% to its consolidated revenues.

In the logistics sector, Blue Dart Express remains a strong player while other small players have been succumbing to the stress caused by the pandemic. “BlueDart being an already profitable player in the space, remains a key beneficiary of such changing dynamics in the sector, which helps it to gain its lost market share,” ICICI Direct said. 

On the charts, in the case of any correction, Blue Dart Express shares are expected to witness buying demand re-emerge at Rs 2,900-2,860 levels. “We expect the stock to continue its positive momentum and head towards Rs 3710 levels in the coming months as it is at the confluence of the high of March 2019 and the 61.8% retracement of CY18-20 decline (Rs 4824-1873) placed around Rs 3710,” the report added.