Mahindra Logistics shares drop 5% after ₹15 crore Q2 net loss in FY24

Mahindra Logistics, a major third-party logistics provider, posted a consolidated net loss of ₹15.93 crore for the second quarter of the current fiscal year, compared to its ₹11.9 crore net profit from the same period last year. While the company's consolidated revenue grew by 3%, reaching ₹1,364.76 crore. On the operational front, EBITDA decreased by 20.7%, falling to ₹53.6 crore from ₹67.6 crore in the same period of the previous fiscal year.  Earnings per share (EPS) stood at ₹-2.21 representing a decrease of 230.77% compared to the same period the previous year.

Outlook for Q3 Results

Despite the challenging quarter, Mahindra Logistics remains optimistic about the future. They anticipate better performance in Q3, driven by positive demand trends during the festive season, improved margins through synergies with the acquired B2B business, and ongoing cost reduction initiatives.

In terms of business segments, the 3PL Supply Chain services showed a 4% year-on-year growth, primarily from the automotive and engineering, consumer, and durables sectors. However, the e-commerce volumes remained weak, with a late-quarter pickup in anticipation of increased demand during Q3.

Mahindra Logistics continues to maintain a strong presence in warehouse management, overseeing 19 million square feet of warehouse space within the 3PL business. Expansion projects in various locations are progressing as planned, including the launch of a multi-client warehouse in Bhiwandi, Mumbai, covering 6.5 lakh square feet. This facility is designed to efficiently manage fulfillment and distribution for industries such as automotive, e-commerce, and fast-moving consumer goods (FMCG).

CEO's Perspective

CEO, Rampraveen Swaminathan, emphasized the positive outlook for the logistics industry, driven by long-term infrastructure and consumption growth. He noted that despite challenges in the e-commerce segment, their organic growth in 3PL remained positive. Margin improvements are on track, and they are implementing measures to enhance their network, customer service, and volume in various business segments.

Stock Performance

In the past week, Mahindra Logistics' stock has shown a negative return of -5.64%. Looking back over the last six months, the return has been -1.63%, and the year-to-date (YTD) return stands at -26.47%. The stock price is trading near its previous low of ₹349.20, which was reached on October 11, 2023. it has dropped by 38% from its highest level in the past 52 weeks, which was ₹558.85 on November 3, 2022.

Currently, Mahindra Logistics has a market capitalization (market cap) of ₹2,657.77 Crores. It reflects the total value of all its outstanding shares. Its 52-week high and low are ₹558 and ₹349.15, respectively. In terms of ratings and governance changes, the company has seen 3 Sell ratings, 2 Hold ratings, and 5 Buy ratings from analysts as of October 25, 2023.

About Company

Mahindra Logistics operates as a versatile logistics and mobility solutions provider, catering to a broad spectrum of industries, including automotive, engineering, consumer goods, pharmaceuticals, telecommunications, commodities, and the ever-expanding e-commerce sector. Their operations are divided into key segments, including contract logistics, which encompasses services like warehousing, inventory management, distribution, and last-mile delivery, ensuring the efficient and timely delivery of goods to their final destinations. The company also offers B2B Express services and handles freight forwarding for businesses across various industries. In terms of geographical presence, as of FY23, Mahindra Logistics splits its activities, with 51% serving the Indian market and the remaining 49% dedicated to international operations. Its diverse portfolio allows Mahindra Logistics to provide comprehensive and tailored solutions to its clients, both within India and on a global scale.

Final Words

While the quarter presented challenges for Mahindra Logistics, the company remains hopeful for a more positive Q3, thanks to the festive season and ongoing strategies for growth and margin improvement.