Despite implementation challenges, GST should be a game changer for the Indian economy and the logistics sector in general and have a profound impact on the supply chain across industries. The logistics sector has been awarded the infrastructure status by the Central government and the launch of infrastructure projects such as Bharat Mala, Sagar Mala, etc., will provide tremendous impetus to this sector in the long run. The implementation of the E-Way Bill should also significantly improve and enhance the efficiency and transparency within the sector. Similarly, setting up of the National Logistics Portal by the Department of Commerce will further provide a momentum to the sector and help reduce cost and boost India’s rank in the overall Logistics Performance Index.

Blue Dart was founded in 1983 by three young entrepreneurs with the idea of delivering small packages and parcels for the Indian export sector. It became the first carrier to provide real time domestic and international delivery services and subsequently went public in 1994. It later got government permission for operation of cargo aircraft in the country. Seeing the immense potential of the company, DHL Express Singapore Pte Ltd picked up an 81.03% equity stake in Blue Dart to become the largest logistics company in the country. It manages a dedicated air freight capacity with a fleet of six B-757s freighters, handling through express support vehicles and catering to over 35,000 locations. The company leverages its pan-India reach via ground hubs and over 250 network routes. This widespread infrastructure enables the company to have a competitive advantage over existing domestic players and new entrants. With a pan-India reach, Blue Dart continues to remain the preferred logistics partner for catering to Tier II and Tier III cities and to enjoy uniqueness and thus command a premium parcel realisations (over 10% vs other competitors). With the economy set to gather steam, Blue Dart’s leadership position, coupled with a strong balance sheet and close to debt-free capital structure is well equipped to ride out the next growth cycle triggered by GST implementation. In addition, structural changes like the E-Way Bill coupled with formalisation of the sector will put the company on a strong footing in the coming years. Given its strong client base and improvement in the Indian economy, the company’s business model provides significant earnings visibility. The Blue Dart Express stock is a blue chip worth accumulating in small quantities over time. The stock can be accumulated by portfolio investors at the current market price of Rs 3,500 for steady gains over long term.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent

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