BLUEDARTNSEAugust 02, 2022

Blue Dart Express Limited

8,213words
147turns
13analyst exchanges
2executives
Management on call
Ankita Shah
ELARA SECURITIES PRIVATE LIMITED
Aneel Gambhir
CHIEF FINANCIAL OFFICER - BLUE DART EXPRESS LIMITED LUE
Key numbers — 32 extracted
Rs.75
mpact on crude, which has impact on foreign exchange. We all know how dollar has been moving from Rs.75 to Rs.76 to current year close to Rs.80 range. We have seen crude moving from Rs.100 range to Rs
Rs.76
crude, which has impact on foreign exchange. We all know how dollar has been moving from Rs.75 to Rs.76 to current year close to Rs.80 range. We have seen crude moving from Rs.100 range to Rs.125 or so
Rs.80
ign exchange. We all know how dollar has been moving from Rs.75 to Rs.76 to current year close to Rs.80 range. We have seen crude moving from Rs.100 range to Rs.125 or so and then slightly off late pull
Rs.100
n moving from Rs.75 to Rs.76 to current year close to Rs.80 range. We have seen crude moving from Rs.100 range to Rs.125 or so and then slightly off late pulling down. Then we also saw part of the world
Rs.125
5 to Rs.76 to current year close to Rs.80 range. We have seen crude moving from Rs.100 range to Rs.125 or so and then slightly off late pulling down. Then we also saw part of the world getting impacted
50%
directly connected with the petrol prices. In light of that, the topline growth has been close to 50%, which is quite healthy very strong growth, but if you discount it for the impact due to base a
15%
about addition of two 737-800 aircraft, which will add roughly about depending on sectors between 15% to 20% of the capacity expansion on the current level, so currently as you know we have a fleet o
20%
ddition of two 737-800 aircraft, which will add roughly about depending on sectors between 15% to 20% of the capacity expansion on the current level, so currently as you know we have a fleet of six
rs,
ter that we spend more of time 81.UE D one question and answer and understanding of the numbers, so will hand it over to Ankita, so that we take question and answer. Over to you Ankita thanks.
150 basis point
r so in improving our margin, so we feel that current level of margin may be plus or minus 100 to 150 basis points, our efforts will be to maintain that kind of margin as we move ahead, but this is not a guidanc
90%
7, which we fly with the capacity of 500 tons overnight and we have capacity utilization of about 90%, which takes care of roughly about two third of the traffic, which we can carry. Almost one third
Rs.300 Crore
ld into start off this? Aneel Gambhir: Roughly for these two aircraft purchase anywhere between Rs.300 Crores to Rs.350 Crores kind of investment would be there. Pulkit Patni: Investment okay, and these
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Guidance — 20 items
Ankita Shah
opening
“Aneel Gambhir, the CFO of the company and firstly congratulations Sir on a very good performance and we would like lo start with opening remarks about the quarter's performances and the outlook going forward and post that we can open the floor for question-and-answer session.”
Aneel Gambhir
opening
“With that, I will not take much of time it will be better that we spend more of time 81.UE D one question and answer and understanding of the numbers, so will hand it over to Ankita, so that we take question and answer.”
Aneel Gambhir
qa
“One of the major verticals is ecommerce and that has been growing in a very healthy phase and we have been having good growth high double digit growth kind of a scenario and as 1 just mentioned that generally during festive period, the people tend to order more online and shopping and historically if you see the trend of shopping is high especially on the online during this period so we expect that scenario would continue.”
Ancel Gambhir
qa
“If this continues in the longer run, it could create a problem for economy and a high inflation scenario that is where we expect that the scenario of high crude prices should cool down and should come to reasonable level, which could be around 80 to 85 or so.”
Ancel Gambhir
qa
“Margins generally we have been trying to look at cost efficiencies wherever possible and that is what has helped us in the last two years or so in improving our margin, so we feel that current level of margin may be plus or minus 100 to 150 basis points, our efforts will be to maintain that kind of margin as we move ahead, but this is not a guidance.”
Rahul Agarwal
qa
“Yes it does, and the capacity addition will be in the second half is that a fair assumption the new aircraft that you will add?”
Rahul Agarwal
qa
“The new aircrafts that you will add freighters that will be more like the second half?”
Aneel Gambhir
qa
“For cargo business generally it is old fleet, which will be anywhere between 15 to 20 years kind of an old fleet, which is generally used for cargo.”
Pulkit Patni
qa
“How should we look at employee cost from these levels, any guidance would be pretly helpful?”
Krishnendu Saha
qa
“Right and this Rs.360 Crores investment, will it be shown as a gross block or it will be spent as ROU?”
Risks & concerns — 6 flagged
Just wanted to understand on the demand scenario now what we understand is that April and May were very good months and then we saw some bit of slowdown in June and July, so just wanted to understand how are things shaping up on the demand side of it?
— AlokDeora
If it does not come to that level, we would see major impact of inflation hitting Indian economy and which in tum could impact demand.
— Ancel Gambhir
Generally, the better margins would be in the festive season quarter, so that is how we have seen in the past, but things are changing, so you never know how the situation turns out on the geopolitical side probably that is where some risk could be there.
— Aneel Gambhir
which has been implemented but it is because of product mix because we have different services and different products like you have a courier business, you have air packages, you have ground packages and also international, so as a result because of product mix change when you look at overall basis you are not able to see that impact and that is where you will see that the volume increase is also 50% and revenue increase is also 50%, so there is no impact of fuel as well as of the GP!.
— Aneel Gambhir
Now I am not able to put value to you currently because that is not in public domain and it will be difficult for me to give information which is not the public information.
— Aneel Gambhir
Definitely when it comes to emergency situation drone does come handy and it has a capability to deliver shipment, but then currently from cost point of view probably it is quite cost prohibitive unless until the evolution happens from this front, it will be a little bit difficult at this point but yes going forward there could be an opportunity on this side.
— Aneel Gambhir
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Q&A — 13 exchanges
Q
Congratulations on the good numbers, especially on the topline front. Just wanted to understand on the demand scenario now what we understand is that April and May were very good months and then we saw some bit of slowdown in June and July, so just wanted to understand how are things shaping up on the demand side of it?
Aneel Gambhir
As far as demand is concerned, so far there has been a very good demand, which is continuing as I mentioned in the beginning that our expectation is that yes there could be in between small intervals of some softening trend, but going by the broader economic indicators, we feel that the current level of demand could continue and more so because we are heading for festive season, generally we have seen demand during festive season is strong so we believe there is no reason at this point of time for demand to go down unless some disruption comes in the economy. Sure. Could you just provide some
Q
Thanks for the opportunity. Congratulations on a good set of numbers. I just wanted to understand within your air segment, what would be the mix of traffic between your own planes and may be from the passenger belly cargo?
Ancel Gambhir
As I mentioned in the beginning that we have six aircraft 757, which we fly with the capacity of 500 tons overnight and we have capacity utilization of about 90%, which takes care of roughly about two third of the traffic, which we can carry. Almost one third of the traffic we currently move through multi model. Multi model has various options, most of it could he belly space through which we could move and also one of the reasons is that when we built up this capacity as I mentioned that almost 50% of the capacity is already built up for the new aircraft, so that also features part of this on
Q
Thank you for taking my questions. Directly adding two planes why not go one by one? Are we that optimistic about volumes, just wanted to get your sense how come you are directly two planes right now and then I will follow up with more questions? BtU
Aneel Gambhir
Sure Pulkit. The idea here is these two plane� are relatively with the lower capacity as compared to our current fleet, so current fleet each aircraft has a capacity of roughly about 30 tons and proposed aircraft which is 737-800 would have capacity of about 18 tonnes and this will help us in moving into tier two and tier three cities and since we have many upcoming cities that is why we thought probably one aircraft would not be able to cover the geographical reach we want to have and that is why we chose to go for two aircrafts at this point of time. Fair point. Could you also quantify what
Q
Thanks for taking my question. I just have one question related to your cost. On employee cost, you elaborated that there was an increase in the minimum wages, but on the other two cost items just out of curiosity has there been any regrouping because I could see that on a Q-o-Q basis the operating expense are up l 7'7c, but the other expense is down quite sharply 15',"l, Q-o-Quarter? Is there any regrouping first of all?
Ancel Gambhir
There is no grouping. I would invite you to look at Q-o-Q number. There is a pattern which you see that generally this course built up over a period of time so Qi would have a relatively lower cost. The Q3 would have the highest cost; the similar pattern you could see if I am to just give you the number even in the previous year the similar trend was there.QI had Rs.58 Crores, Q2 had Rs.76 Crores, Q3 had Rs.94 Crores and Q4 had Rs.82 Crores so now this time it is Rs.69 Crores which needs to be compared with Rs.58 Crores. BLU Got it. There is no regrouping but there is some element of these cos
Q
Thanks for taking my question. Most of the questions have been answered. There has not been any normal price increase either because when I am looking at your revenue per tons it is flat on a Q-o-Q basis so even that has not increased. Are we planned to take a normal hike besides the ATF prices also and on the second thing when I am looking at the parcel load is increased again from 3.41 to 3.61 kgs per parcel, so are we doing a lot of road traffic right now because I was under the impression that some amounts of what you call cargo, which is light will come back like papers and all new and ex
Aneel Gambhir
What was the last question? Rs.360 Crores which we are planning for the two aircraft will it come on ROU or it will come as a gross block? Let me try and give you answer to each one of your questions. The first question was on revenue that you said that you compared per kg or pattern realization which is not attractive so is there any rate hike. There is a rate hike and there is GP! which has been implemented but it is because of product mix because we have different services and different products like you have a courier business, you have air packages, you have ground packages and also inter
Q
Good evening and thank you for the opportunity, so first of all ground express side just wanted to understand the sequential growth in the ground express how high would have been vis-a-vis Air Express?
Aneel Gambhir
Product wise growth is not in public domain, but I can only give you indication that it has been growing at a high double digits. Sequentially also it has been in double digit growth. BLUED Got it and looking at the average growth, it has been double growth on a sequential basis; ground should have been much higher at upwards of in fact (inaudible) 36.23 for the realization to? I am not able to hear you Krupa clearly because of variation in audio. I was just ask asking that when looking at the sequential tonnage growth at about 11 % then ground should have been much, much higher than that numb
Q
Good afternoon thank you for opportunity. I had two questions firstly if one third of our belly cargo will move to these new aircrafts, then is it fair to say that the 15% to 20% capacity increase will not lead to a commensurate increase in volumes for us?
Aneel Gambhir
You are right because I have mentioned volume is already moving almost half of the capacity utilization volume is already sitting in the base. As I mentioned that we are currently moving from the module through belly space, which will move from commercial or the belly space into our aircraft. Then this should basically have a larger impact on our margins, which is factored in the broad indication that you are giving that the margins could go up from current levels by 100 to 150 basis points? No I said plus or minus. Yes plus or minus right? It could be other side also. Another thing is for lon
Q
On your comment that 507<- of capacity is pre-loaded on the new aircraft so at 50',1' capacity utilization what is the apex loss that you would have on running these cargos and my second question is on the GM reduction side on your standalone operations we saw that the gross margin is reduced from 37 to 33. We usually take a price hike once a year so does it mean that if the fuel prices stay what they are when we take the next price hike is where the GM start improving or I have to look at it any other way?
Aneel Gambhir
What was your first question? BUE My first question is at 50'7o operating utilization of two aircraft what is the opex loss? Generally at around 70% of the capacity utilization we break even; 70<;!: to 75'7c depending on the sector how you fly right so that is the kind of gap which you have if you are talking about 50% to 55% getting covered so to the extent of around 15% to 20% of the capacity utilization would be the opex loss. Now I am not able to put value to you currently because that is not in public domain and it will be difficult for me to give information which is not the public infor
Q
Thanks for the opportunity. Just a couple of things you mentioned the new freighters will typically cater to the new smaller cities, so today given that you have to depend on belly cargo, is your growth or presence in these smaller cities constrained so what you are talking about is 50% incremental cargo that can look even much higher if the two freighters kind of come in because you will be able to provide your own service how should one look at that?
Aneel Gambhir
You are absolutely right. In fact, this is one of the aim that we are seeing that beyond the seven cities when we expand the market will also expand with a better service quality and that is why we thought rather than going for one big aircraft which may cater to fewer locations we go for two smaller aircrafts covering more cities, so that we are able to offer better service quality and develop newer market and as we know that with metro getting saturated the growth will come from tier one and tier two cities and that is why we are focusing on those areas. Okay and just one last thing, any sen
Q
Thank you for taking my question. I have two questions. The first one how are we targeting to grow revenue share from e-commerce segment say over the next two years and also could you please give some color on the biggest e-commerce players such as Amazon and Flipkart, which owns their own logistics or they have their own internal capabilities to deliver their products end to end so, how are we seeing the demand coming from such big players? My second question is related to the net debt number so what would be the net debt number as on date and any guidance from net debt to equity once we comp
Aneel Gambhir
Can you repeat the second question. It was slightly away from mike. Okay I want the net debt number as on date and any guidance for net debt to equity number oni::e we complete the acquisitions of those two aircraft? Net debt, 1 was not able to hear you properly okay. Let me first give you the second question and then come to the first one. As far as net debt is concerned, now if you look at .. BLUE from banks borrowing point of view, there is no borrowing for the entire group be it Blue Dart Express or Blue Dart Aviation. We have paid off all the borrowings from bank. We do have Rs.200 Crores
Q
Good evening. Thank you for the opportunity so for the ground segment particularly apart from the Rs.300 Crores to Rs.350 Crores of capex that we are planning to do, are we doing any particular capex in the ground segment for this year and if yes then what are the initiatives that we are going to take for it?
Aneel Gambhir
Thanks for your Ash, so ground side also we will be expanding. Obviously ground becomes complementary to air as well as also offers opportunity for us to expand our ervices, so we would be also investing on though generally we operate on a asset-right model, so all our facilities are on lease basis, be it vehicles or be it our warehouses or hubs, so we would continue the same way so to that extent our investment requirement on ground will be lower because all of this will be more on operating these kind of a scenario, but then there would be good amount of capacity would get added both on the
Q
Thank you for the opportunity. Just one question that what is your view on ONDC, which was launched today and looking at the growth prospects what you have talked about in the Air Express business?
Aneel Gambhir
Krupa your voice is not clear. Can you repeat. What will be your view on ONDC and also what we are seeing is that are you resetting your opinion that Air Express is going to grow much faster or similar to ground express going ahead? Okay you are talking about growth on the air versus ground right. Yes we are adding two aircrafts so just wanted to see that are you seeing that prospects as much as of remedy growth is much faster than air express now? Yes, as I have been mentioning earlier there will be growth on both the offerings be it air or ground. Yes relatively if you want to understand we
Q
Thank you. We would really like to thank the management for giving us the opportunity to host their call and wishing them all the best for the company quarter. Aneel Sir would like to add any closing comments.
Aneel Gambhir
Thank you all for your active participation and good questions. I really enjoyed interacting with you and maybe soon look forward to having another interaction and of course the next quarter result and thank you Elara for hosting us. Really enjoyed that.
Speaking time
Aneel Gambhir
53
Moderator
15
Rahul Agarwal
9
Krishnendu Saha
9
Sandip Bansal
8
Krupashankar Nj
7
AlokDeora
6
Ancel Gambhir
6
Pulkit Patni
6
Nilesh Dhamnaskar
6
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Opening remarks
Ankita Shah
Thank you. A very good morning to everyone who has joined to this call. We welcome you to this IQ FY2023 earnings conference call of Blue Dart Express. We have with us the management represented by Mr. Aneel Gambhir, the CFO of the company and firstly congratulations Sir on a very good performance and we would like lo start with opening remarks about the quarter's performances and the outlook going forward and post that we can open the floor for question-and-answer session. Thank you and over Lo you Sir.
Aneel Gambhir
Thank you Ankita and good evening all the investors and analyst community. It is a pleasure to interact with you. As you have seen of late we made this practice more or less to interact and to have a discussion and clarity, so happy to be here to discuss about results of the last quarter where we had a board meeting yesterday that is QI of FY2022-FY2023. Before we begin question and answer session as Ankita mentioned, I will just give you a brief from the last quarter ending of financial year to now how the situation is and what are the highlights of the period and also how has been the performance and thereafter we will spend most of the time in question and answer. Let me begin with the last year's performance. I am sure all of you would have seen after a stellar performance in the FY202 l-FY2022, which was a record performance so far in the industry of the company. The situation on the economy side we all know how the geopolitical situation is getting impacted, which is having impac
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