Neutral Mahindra Logistics; target of Rs 510: Motilal Oswal

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26 Aug, 2025 12:21

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Mahindra Logistics (MLL)’s 1QFY25 revenue grew ~10% YoY to INR14.2b (in line). EBITDA margin came in at 4.7% (vs. our est. of 4.5%), down 50bp YoY but up 80bp QoQ. EBITDA was flat YoY at INR663m (in line) in 1QFY25.  MLL posted adj. net loss of INR93m in 1QFY25 vs. adj. net loss of INR86m in 1QFY24 (our est. of INR19m profit). The higher tax outgo hit APAT. The supply chain management recorded a revenue of INR13.4b (+10.4% YoY) and an EBIT loss of INR42m. Enterprise Mobility Services (EMS) reported a revenue of INR800m (+0.7% YoY) and an EBIT of INR17m. Despite a muted demand environment, 1QFY25 saw healthy order bookings in the 3PL and cross-border businesses. The cross-border business gained traction led by higher demand for inbound ocean cargo. The mobility, last mile delivery, and auto outbound logistics businesses also delivered strong performance. However, earnings were hit by extended start-up costs and higher manpower & warehousing lease expenses.

While MLL’s performance was in line, the express business struggled with lower tonnage. MLL is hopeful of better volumes from 2QFY25. We increase our APAT estimates for FY25 by 6% considering pickup in express business volumes from 2Q. For FY26, we increase our APAT estimates by 14% to incorporate the improved outlook in the express logistics business. We estimate a 20%/35% CAGR in revenue/ EBITDA over FY24-26. Reiterate Neutral with a TP of INR510 (premised on 26x FY26E EPS).

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