Blue Dart Express (NS:BLDT) Limited is one of the most renowned players in the logistics space in India. The company has an integrated business of air and ground transportation and also distributes time-sensitive packages to various destinations, primarily within India. It has a market capitalization of INR 16,915 crores and the stock trades at a P/E ratio of 44.26, compared to the sector’s average of 52.3.
On the financial front, the company recorded a YoY revenue jump of 34.24% to INR 4,441.28 crores in FY22, while net income soared over 275.4% to INR 382.21 crores. This resulted in a profit margin of 8.61% for the year, which was the highest since FY14, at least. There has been a noticeable jump seen in the FII holding in the September 2022 quarter, to 5.13%, from 3.5% a quarter ago.
Image Description: Daily chart of Blue Dart Express
Image Source: Investing.com
The stock is one of the best performers after the Covid-19 pandemic, as it rose from ~INR 1,900 in August 2020 to ~INR 9,600 in October 2022. That’s a massive gain of over 400% in around 2.1 years. However, from the all-time high of INR 9,640, the stock went through a selling spree which threw the price back to around ~7,000 levels quite fast.
As this 27% fall came quite sharply, the stock also became oversold which was depicted by a reading of 21.5 by the RSI (daily, 14). When a stock becomes oversold due to excessive selling, a counter-trend rally has a high chance to materialize. The same happened in the case of Blue Dart Express shares and they gradually started to inch up and currently trading at INR 7,224, by 3 PM IST.
But when do you consider whether the uptrend has started or is yet to begin? A trend reversal signal such as a trendline breakout comes in handy here. On Friday, the stock broke above a steep trendline which was the last signal of the bears losing the battle. A trendline breakout is a reliable warning of a trend reversal and when a stock does it from an oversold zone, it becomes a very good candidate for recovery from beaten-down levels.
On the upside, a level of around INR 7,820 could be on the screen in the next few weeks. If the stock fails to deliver a rally, then the level of INR 7,000 (on a closing basis) should be carefully watched to change the view.