Mahindra Logistics Q2 Results Review - Express's Weak Show Hurts Overall Performance: Motilal Oswal

Motilal Oswal Report

Mahindra Logistics Ltd.’s Q2 FY24 revenue grew ~3% YoY to Rs 13.6 billion (in line). Ebitda margin came in at 3.9% (versus estimate of 5.1%) in Q2 FY24 (-117 basis points YoY and -120 bp QoQ). Ebitda declined 21% YoY to Rs 536 million (versus estimate of Rs 718 million) during the quarter.

The company posted a net loss of Rs 159 million in Q2 FY24 versus adjusted profit after tax of Rs 122 million in Q2 FY23 (our profit after tax estimate was Rs 29 million).

Weak operating performance and high tax outgo impacted profit after tax adversely during Q2 FY24.

The company’s Ebitda and profit after tax were hit by Mahindra Logistics Express’s weak performance (Rivigo B2B express business). The division reported an operating loss of Rs 244 million during Q2 FY24.

A slower-than-expected volume recovery in the express business led to higher operating loss on a QoQ basis. Mahindra Logistics now expects Ebitda breakeven by end-FY24 (earlier target of Q3 FY24).

We cut our Ebitda margin estimates for FY24 and FY25 by 40 bp and 20 bp, respectively, to factor in the extended losses in the express business.

We expect Mahindra Logistics to clock a revenue/Ebitda compound annual growth rate of 18%/19% over FY23-25.

We reiterate our 'Neutral' rating with a revised target price of Rs 330 (premised on 26 times FY25E earnings per share).

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