Mahindra Logistics sees revenue surge despite financial hiccups – What this means for investors!

Mahindra Logistics Ltd. (MLL), a major player in India‘s logistics and mobility sector, has reported a revenue increase of 10% year-over-year for the first quarter of FY25. The Company’s revenue for Q1 FY25 reached INR 1,420 crores, up from INR 1,293 crores in the same quarter last year.

For the quarter ending June 30, 2024, Mahindra Logistics Ltd. reported mixed financial results. The Company’s consolidated EBITDA for Q1 FY25 was INR 66 crores, a slight decrease from INR 67 crores in Q1 FY24. Profit Before Tax (PBT) stood at a loss of INR 2.5 crores, compared to a profit of INR 0.6 crores a year earlier. The net profit after tax (PAT) also saw a decline, with a loss of INR 9.3 crores versus INR 8.6 crores in the previous year. Earnings per share (EPS) were reported at INR (1.29), down from INR (1.19) in Q1 FY24.

Comparing Q1 FY25 to the previous quarter (Q4 FY24), Mahindra Logistics Ltd. showed a slight decline in revenue from INR 1,451 crores to INR 1,420 crores. EBITDA increased from INR 57 crores to INR 66 crores, while PBT improved from a loss of INR 9.2 crores to a loss of INR 2.5 crores. PAT also improved from a loss of INR 12.9 crores to INR 9.3 crores. EPS showed a positive shift from INR (1.78) to INR (1.29).

On a standalone basis, Mahindra Logistics Ltd. reported a revenue increase to INR 1,157 crores in Q1 FY25 from INR 1,051 crores in Q1 FY24. However, EBITDA fell to INR 72 crores from INR 83 crores. PBT decreased significantly from INR 31.1 crores to INR 13.7 crores, while PAT dropped from INR 23.0 crores to INR 10.2 crores. EPS fell from INR 3.18 to INR 1.42. Compared to the previous quarter, standalone revenue decreased slightly from INR 1,183 crores, but EBITDA, PBT, PAT, and EPS all showed improvements.

During Q1 FY25, Mahindra Logistics Ltd. saw a 9% year-over-year growth in its Contract Logistics segment. The Freight Forwarding business experienced a 12% quarter-over-quarter increase, driven by heightened demand for inbound ocean cargo. The Express business showed a 2% year-over-year revenue improvement and a 16% reduction in PAT losses due to ongoing cost optimization efforts.

The Company also made significant advancements in its operations with the launch of a new state-of-the-art Built-to-Suit (BTS) warehouse in Guwahati. Mahindra Logistics Ltd. manages over 20 million square feet of warehouse space in its 3PL business.

Additionally, MLL formed a joint venture with Seino Holdings Ltd. to offer integrated logistics solutions to Japanese automotive and auto-ancillary customers in India. This partnership is expected to leverage Seino’s global relationships to address logistics needs in the region.

Rampraveen Swaminathan, Managing Director and CEO of Mahindra Logistics Ltd., acknowledged the challenging demand environment but noted strong performance in order bookings for 3PL and cross-border businesses. Swaminathan highlighted growth in the cross-border segment, particularly in inbound ocean cargo, and noted improvements in the Mobility, Last Mile Delivery, and auto outbound logistics sectors. He attributed the impact on earnings to extended startup costs and increased manpower and warehousing lease expenses but remains optimistic about significant improvements in the latter part of the year.

Mahindra Logistics Ltd.’s performance in Q1 FY25 reflects a mix of growth and challenges. The 10% revenue increase demonstrates strong business fundamentals despite the overall economic environment. The improvement in certain financial metrics compared to the previous quarter is promising, though the year-over-year declines in PAT and EPS indicate ongoing issues that need addressing. The strategic initiatives, including the new warehouse and joint venture, position the Company well for future growth.