'Hold' Mahindra Logistics Shares Retains PL Capital Post Inline Q1 Results — Check Target Price

Mahindra Logistics' consolidated revenue grew by 14.4% YoY to Rs 16,246 million (our estimate: Rs 16,206 million). Gross profit improved by 5.4% YoY to Rs 2,172 million (our estimate Rs 2,415 million), with a margin of 13.4% as against a margin of 14.5% in Q1 FY25.

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PL Capital Report

We increase our EPS estimates by 26%/8% for FY26E/FY27E amid interest cost reduction arising from debt repayment with the proceeds expected to be received from rights issuance. Mahindra Logistics Ltd. reported an in-line operating performance with an Ebitda margin of 4.7% (our estimate: 4.9%).

While volumes in the B2B express business were up by 10% on a sequential basis, yields remained under pressure due to inferior customer mix. Nonetheless, initial signs of recovery are evident as revenue growth was in double digits with Ebitda losses narrowing to Rs 118 million.

However, given the competitive landscape we expect Mahindra Logistics to seed Ebitda losses of Rs 311 million/Rs 64 million in FY26E/FY27E in the B2B express business.

Retain Hold on the stock with a target price of Rs 383 as re-rating hinges on turn-around in the B2B express business.

We have increased our target P/E multiple to 25x (earlier 22x) amid expected improvement in balance sheet strength.

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