MAHLOG - Mahindra Logistics Limited Share Price

Mahindra Logistics management provided a positive outlook during the recent earnings call, emphasizing the significant progress made in FY26 after returning to profitability following two years of losses. Key points highlighted by management include:

1. Revenue Growth: The company reported Q4 revenue of INR 1,791 crores, reflecting a 14% year-on-year growth, with full-year revenue reaching INR 6,999 crores, marking a 15% increase.

2. Contract Logistics Performance: The contract logistics segment grew by 12% year-on-year in Q4, with gross margins increasing by 19%. Full-year revenue in this segment reached INR 5,490 crores, up 16%.

3. Express Business Turnaround: The Express business saw a remarkable 49% revenue growth in Q4 year-on-year and showed improved gross margins. Management expressed confidence in achieving mid-teens growth in this segment moving forward.

4. Operational Excellence: The initiation of operational improvements led to better service reliability and consistency, which in turn garnered positive customer feedback.

5. E-commerce Revenue: The e-commerce and quick commerce business exceeded INR 1,000 crores in annual revenue, highlighting a strong foothold in a rapidly growing market.

6. Strategic Decisions: The company successfully reduced warehouse space by 9 lakh square feet in FY26 and aims to further optimize operations while maintaining focus on profitability rather than just revenue.

7. Focus on EBITDA Growth: Management is committed to ongoing EBITDA improvement alongside gradual progress in PAT, noting a reported PAT of INR 20.2 crores for Q4, up from losses of INR 6.7 crores in the previous year.

8. Future Challenges and Caution: Despite current positivity, management acknowledged potential headwinds from geopolitical issues impacting the Freight Forwarding segment and emphasized a cautious yet focused approach towards sustainable growth.

Overall, Mahindra Logistics aims to sustain momentum in profitability and operational excellence while navigating through external market challenges.

Question 1: Krupashankar NJ: "What would have been the volume growth for the quarter and for the year? Given that the Customer exercise is behind us, can one expect mid-teens sort of a growth over the medium term in this business?"

Answer: Thank you for your question. I believe mid-teen growth is achievable in our Express business over the medium term. In terms of volume growth, while we won't publish specific numbers anymore, I can share that we're aiming for mid- to high-teens growth. This reflects not just volume but also profitability, as we've streamlined operations to eliminate less profitable volume.

Question 2: Alok Deora: "When do we expect the EBITDA breakeven in the Express business? Are we using significant technology like sorting belts in this business?"

Answer: I can't provide a specific timeline for EBITDA breakeven; however, we're very close to it. We've become gross margin positive and are focusing on enhancing our technology infrastructure, though I can't go into granular details. Our tech backbone supports our operations, improving our service delivery.

Question 3: Jinesh Joshi: "The reduction of warehousing space in the contract logistics business"”how have margins improved, and what segments are you evaluating for growth?"

Answer: The improvement in margins is linked to strategic decisions to relinquish non-profitable leases and focus on profitable clients. We're evaluating new segments to further improve our business mix and profitability, with entry planned this year into at least one of those segments.

Question 4: Khushi Soni: "If diesel prices go up by INR10-12 per litre, how would that impact you? Can you pass on those costs?"

Answer: An increase of that magnitude in diesel prices would be entirely passed on to our customers. However, if such a price increase occurs, it could incite broader inflationary impacts on the economy, which we are closely monitoring.

Question 5: Sonal Minhas: "Do you see improvements in pricing realization in the Express logistics business due to market consolidation, and should we expect margins to inch towards double digits?"

Answer: Yes, consolidation has led to a rationality in pricing. We are observing improved pricing realization as the industry matures, and while I can't promise specific margins, we're on a journey toward profitability and are working diligently to enhance our financial standing.