Motilal Oswal's research report on Mahindra Logistics
Mahindra Logistics Ltd. (MLL) reported a revenue growth of 17% YoY to INR12.7b in 4QFY23 (8% below estimates). EBITDA increased ~24% YoY to INR637m (v/s our estimate of INR 663m). EBITDA margin came in at 5.0% (v/s our estimate of 4.8%) in 4QFY23 (up 30bp YoY and QoQ). Higher M&M volumes, easing inflation, and crude prices helped MLL offset the sluggish demand in the e-commerce segment. MLL reported a loss of INR8.2m in 4QFY23 v/s APAT of INR74m in 4QFY22 (our estimate of APAT stood at INR53m). Higher depreciation and interest costs related to recent acquisitions drag the overall performance. For FY23, MLL reported a revenue of INR 51.3b (up 24% YoY), EBITDA margin 5.1% (up 60bps YoY) and APAT of INR 263m (up 50% YoY). Supply Chain management recorded revenues of INR 12b (up 15% YoY) and EBIT loss of INR37m. Diversified revenue portfolio across segments offset the muted growth in the Ecommerce segment for the quarter. Enterprise Mobility Services (EMS) reported revenues of INR 755m (up 6% YoY) and an EBIT loss of INR 9m. The airport-based services within the mobility business are experiencing a significant increase, fueled by a surge in travel.
Outlook
We expect MLL to clock a revenue/EBITDA CAGR of 21%/29% over FY23–25E. We believe the losses incurred by the Rivigo business would decrease as the integration of Rivigo with MLL operations gains momentum and the business achieves greater scale. We lower our FY25 PAT estimates by 18% to factor in higher-than-expected depreciation costs related to recent acquisitions. We reiterate our Neutral rating, with a revised TP of INR350 (20x FY25E EPS).
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