Prabhudas Lilladher's research report on Mahindra Logistics
Mahindra Logistics Ltd’s (MLL) operating performance was lower than our estimate with an EBITDA margin of 4.4% (PLe 4.8%) led by 1) unabsorbed white space of 1.1mn sqft, 2) additional hit of Rs30-40mn coming from hiring 6,900 contractual employees due to seasonality, and 3) losses of Rs242mn in B2B express segment. While unabsorbed white space would come down as demand revives, delay in break-even timeline within the B2B express segment is a concern. Incremental volume of 35-40% is required to achieve break-even, which may be challenging in the near term.
Outlook
We broadly maintain our estimates and ‘HOLD’ rating with a TP of Rs493 (earlier Rs500) as we cut our target multiple to 39x (earlier 41x) given the challenges in B2B segment.
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