Neutral Mahindra Logistics; target of Rs 500 : Motilal Oswal

Motilal Oswal's research report on Mahindra Logistics

We attended MLL’s investor meet, wherein the management reiterated its vision of achieving a revenue of INR100b over the next five years. It also touched upon the near term challenges: a) slowdown in the Farm segment, b) increase in fuel prices, and c) startup costs related to the Bajaj contract. Demand environment: While the Auto segment has seen an improvement over the last few months, the Farm segment has been weak. Recovery in the Farm segment is expected by 2HFY23. Segments like FMCG and Pharma have been picking up well, while the Electronics segment has been impacted due to semiconductor shortages. Revenue growth for MLL over the last few quarters has been driven by new client acquisition. Growth within existing clients has been lower than expected. The e-commerce segment has seen subdued growth in the last few months. Around 70% of this market is driven by Electronics, Groceries, Durables, and Apparel. These segments have seen muted growth in recent times.

Outlook

We expect MLL to clock a revenue/EBITDA/PAT CAGR of ~20%/31%/48% over FY21-24. We retain our Neutral rating with a TP of INR500/share (34x FY24E EPS).

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