Hold Mahindra Logistics; target of Rs 287: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mahindra Logistics

While Mahindra Logistics Ltd’s (MLL) top-line missed our estimate by 7% due to lower demand in core 3PL segment, operating performance was broadly inline with EBITDA margin of 5.0% (PLe 4.6%). Though EBITDA losses in B2B express business have narrowed from Rs803mn in FY24 to Rs511mn in FY25, a complete turnaround in near term continues to remain a cause of concern. While management expects EBITDA break-even by 2QFY26E, incremental volumes of ~6K tons per month would be required to achieve the same. We believe this could be challenging given the overall demand scenario and prevailing competitive landscape. In addition, unabsorbed white space of ~1.5mn sq ft is making fixed cost absorption a challenge. We expect sales CAGR of 15.3% over FY25-FY27E with an EBITDA margin of 5.3%/5.7% in FY26E/FY27E.

Outlook

We maintain HOLD on the stock with a TP of 287 (20x FY27E EPS; no change in target multiple) given the ongoing challenges in B2B express business.

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