ICICI Direct recommended hold rating on Mahindra Logistics with a target price of Rs 330 in its research report dated July 31, 2020.
ICICI Direct's research report on Mahindra Logistics
Mahindra Logistics reported 54% decline in revenue to Rs 410 crore owing to 51%, 82% decline in SCM, PTS revenues to Rs 392 crore, Rs 18 crore, respectively. PTS segment (normally ~10% of revenue) has been severely impacted owing to work from home policy adopted by corporates. However, warehousing segment continued to remain resilient and fell 11%. The company owing to its asset light model was able to reduce other expenses by 40% YoY, enabling it to restrict loss at EBITDA level to Rs 2.2 crore. Lower other income and higher depreciation & interest expense led the company to report a net loss of Rs 16 crore (I-direct estimate: loss of Rs 42 crore) vs. net profit of Rs 18.6 crore in Q1FY20.
We remain positive on MLL’s future prospects but as the stock has rallied ~20% in last three months, we downgrade to HOLD with revised TP of Rs 330 (~30x FY22 EPS).
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