MAHLOG - Mahindra Logistics Limited Share Price

Mahindra Logistics Limited's management provided an optimistic outlook during the Q4 FY25 earnings conference call. They reported a year-on-year revenue growth of 8.2% for the quarter, reaching INR 1,570 crores. Warehouse revenue specifically was INR 297 crores, marking a 19% increase from the previous year. The board highlighted that the warehousing business has quadrupled since 2021. For FY26, they anticipate mid to high-teens growth, particularly focusing on the Express logistics business.

Key forward-looking points include:

• A robust order intake for contract logistics, with approximately 1 million square feet of additional warehouse space expected to fully occupy by Diwali.
• The Express business improved orders, achieving 5,000 tons per month of new contracts, indicating a recovery after previous operational disruptions.
• Management expects to increase contract logistics output significantly, contributing to the mid-teens growth target.
• Challenges persist in managing inflation, particularly in labor costs, and global trade volatility. However, the management remains optimistic about the sector's recovery as the domestic economy improves post-election.

In terms of profitability, the management set a gross margin target of 10.5%, with Q4's margin at 9.5%. Chief Financial Officer Saurabh Taneja confirmed that the company would work on achieving these margins while addressing cost pressures.

Overall, the management's focus remains on expanding market share, enhancing operational efficiencies, and leveraging synergies across their logistics services to navigate through economic headwinds effectively.

I'm unable to provide verbatim text or detailed responses from an actual earnings transcript as requested. However, I can summarize the major questions and answers based on the context provided.

1. Question from Amit Dixit: "Can you highlight the quantum of unabsorbed costs in Contract Logistics for this quarter? Also, what revenue trajectory should we expect for the four new warehouse locations?"

   Answer: "We typically maintain low unabsorbed costs in Contract Logistics. Currently, we have around 1.5 million square feet of unabsorbed space. We expect to fully utilize 1 million square feet by September, generating approximately INR20 per square foot. For new warehouses, the Kolkata site is operational, Phaltan is sold out and live, Agartala is expected to be operational soon, with Pune set for revenue generation by Q1 FY26."

2. Question from Amit Dixit: "You mentioned needing 6,000 to 7,000 tons of additional volume for EBITDA breakeven. How quickly can we achieve this breakeven?"

   Answer: "We exited this quarter with around 5,000 tons and expect to reach breakeven by Q2, as we are gaining about 2,000 to 3,000 tons monthly from new orders. We anticipate achieving the required 6,000 tons by the end of Q2."

3. Question from Alok Deora: "Express revenue is lower year-on-year. Given the challenging market conditions, what are your expectations for profitability moving forward?"

   Answer: "While we've seen a decrease in revenue, our volume has increased sequentially. The market is tough, but we've been enhancing sales coverage and focusing on synergies within our logistics. We're projecting mid-teens growth in tonnage for FY26, leveraging our increased market penetration."

4. Question from Jainam Shah: "What strategies will you implement in the Express logistics business to improve profitability in the coming years?"

   Answer: "It's too early for specifics under my new role, but we are focusing on expanding our network, enhancing service offerings, and addressing the challenges and opportunities in the Express logistics space through integrated solutions and customer engagement."

5. Question from Mayur Parkeria: "Is the logistics sector moving towards a more integrated model? What is the revenue share of integrated solutions in your business?"

   Answer: "Currently, about 23% of our revenue comes from complex solutions, with 8-10% from fully integrated services. We provide customized solutions and work towards integration, but report by service line due to market dynamics, enabling better performance comparatives with peers."

Please note that these answers have been paraphrased to fit within the character limit and to maintain the core information conveyed during the Q&A session.