Mahindra Logistics Ltd shares lost over 5 percent to Rs 378 at 12:29pm on July 25 after the company reported loss in the first quarter of FY24.
Earnings of Mahindra Logistics were hurt by higher expenses and lukewarm demand. The company reported a net loss of Rs 8.30 crore for the quarter ended June 30, 2023, as against a net profit of Rs 13.64 crore reported a year back.
Revenue from operations increased 7.78 percent on-year to Rs 1,293.22 crore in Q1FY24 from Rs 1,199.90 crore, Mahindra Logistics said in an exchange filing. Its total expenses surged 9.69 percent YoY to Rs 1,298.83 crore.
The supply chain management (SCM) segment, which constitutes more than 90 percent of the company's revenue, saw a marginal 6.24 percent on-year growth in revenue at Rs 1,213.76 crore, as against Rs 1,142.74 crore in Q1FY22. However, a steep 97 percent decline in the SCM segmental profit was observed in the quarter ended June 2023 at Rs 2.23 crore versus Rs 74.97 crore reported in the same period the previous year.
The company had earlier flagged an impact on its business from slowing network expansion in ecommerce and consumer markets, which analysts believe led to weakening demand resulting in a muted quarter with limited growth.
“While on the standalone front, the core margins have reached 7.9 percent levels, EBITDA losses in the acquired Rivigo B2B division have lowered marginally to an estimated Rs 17 crore, versus a loss of Rs 20 crore in Q4FY23,” ICICI Securities said.
The brokerage firm highlighted the key monitorables to watch out for. They include (a) whether there would be a change in the expected timeline for EBITDA breakeven of Rivigo B2B division, (b) rising competitiveness with players such as Delhivery, and (c) expected pick-up in auto volumes.
During FY 2022-23, Mahindra Logistics’ 3PL Contract Logistics expanded its warehousing network and solutions, supported by a strong recovery in auto and manufacturing. The cross-border business vertical posted ocean freight prices down 80 percent YoY, volume growth on-year in air services, extended connectivity to 55 core trade lanes with support to 200+ locations, and launched air charter services based in the UAE.
The last-mile delivery segment posted strong organic growth of 16 percent and expanded presence to over 200 locations across the country. The B2B Express expanded to over 19,000 PIN codes across India, with 270 hubs and branches, and 400+ business associates. Meanwhile, its mobility business expanded with the acquisition of Meru, and it is expecting demand to improve in FY24 with a return to office being normalised.
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