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Oct 31, 2017 11:48 AM IST | Source: Moneycontrol.com

Subscribe to Mahindra Logistics: ICICI Direct

ICICI Direct has come out with its report on Mahindra Logistics. The research firm has recommended to "Subscribe " the IPO in its research report as on October 30, 2017.

 
 
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MLL operates on an “asset-light” business model pursuant to which it outsources a portion of operations to independent contractors for specific services. Subsequently, majority of the assets (vehicle & warehouse) are provided by a large network of business partners and not owned by MLL. This strategy offers considerable benefits of improved scalability and flexibility of offerings to suit varied sectors and customers. At the same time, asset-light strategy reduces MLL capital expenditure requirements thereby generating higher return ratios.

MLL operates as one-stop shop solutions provider for a variety of logistical requirement of its clients. MLL offers a variety of services across transportation, distribution, warehousing, in-factory logistics, out-bound logistics, international freight forwarding, people transportation and other value added services. Moreover, MLL also undertakes last-mile distribution service, transportation services for large appliances and management of e-fulfilment centres for e-commerce players. These capabilities have led MLL to serve a wider spectrum of clientele across various industry verticals.

Valuation

At the IPO price band of | 427-429, the stock is available at a valuation of 51x P/E multiple (@ higher price band) of an adjusted FY17 EPS of | 8.4. Post listing, MLL would be the second largest listed player in the surface logistics space. The macro theme around GST benefiting the logistics players would progress well with MLL revenues and margin profile. Given the benefits to be accrued over phases, investors with longer gestation period should SUBSCRIBE to the issue.

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