Hold Mahindra Logistics; target of Rs 383: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mahindra Logistics

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. MAHLOG IN reported an in-line operating performance with an EBITDA margin of 4.7% (PLe 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 Rs118mn. However, given the competitive landscape we expect MAHLOG IN to seed EBITDA losses of Rs311mn/Rs64mn in FY26E/FY27E in the B2B express business.

Outlook

Retain HOLD on the stock with a TP of Rs383 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 BS strength.

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