Mahindra Logistics Q3 Results Review - Recovery Still Few Quarters Away: ICICI Securities

ICICI Securities Report

Mahindra Logistics Ltd.’s Q3 FY23 Ebitda was slightly ahead of our estimates; however, profit after tax was lower owing to higher interest cost. Key takeaways include:

1. mixed quarter for third-party logistics division as automotive and manufacturing contributed to growth while consumer and e-commerce lagged;

2. freight forwarding segment faced price headwinds;

3. Rivigo operations accounted for Rs 450 million of revenue and loss of Rs 8.5 million at Ebitda level; and

4. added ~1.1 million square feet of total space under management in Q3 FY23.

Going ahead, Mahindra Logistics has guided for consolidated gross margin to improve by 25-50 bps per annum and express business to become positive at Ebitda level in H1 FY24.

While we remain optimistic on long-term prospects of the business and endeavour of the management to achieve Rs 100 billion revenue by FY26, in near term, stock performance is expected to languish.

Taking cognisance of slower-than-expected recovery in margins and flat to declining price trajectory in the near term, we slash our FY23E/FY24E Ebitda by 13%/3%, respectively.

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