Mahindra Logistics slips 6%, hits 52-week low on disappointing Q2 results

The management expects to report better performance in Q3 due to positive demand uptick in festive season, accelerating margins due to synergies with the acquired B2B business and cost reduction

Shares of Mahindra Logistics (MLL) hit a 52-week low of Rs 347.15, down 6 per cent on the BSE in Wednesday's intraday trade, after the company reported consolidated loss of Rs 16 crore in the September quarter (Q2FY24) due to flat revenue growth. The stock of the logistics company had posted consolidated profit after tax of Rs 11 crore in the year-ago quarter.

The stock has fallen below its previous low of Rs 349.20 touched on October 11, 2023. Moreover. it has corrected 38 per cent from its 52-week high level of Rs 558.85 hit on November 3, 2022.

MLL's Q2FY24 revenues grew barely 3 per cent to Rs 1,365 crore, as compared to Rs 1,326 crore in Q2FY23. Earnings before interest, taxes, depreciation, and amortization (Ebitda) was down 20.5 per cent year-on-year (YoY) at Rs 54 crore, while margin contracted 120 bps to 3.9 per cent during the quarter.

The management, however, expects to report better performance in Q3 due to positive demand uptick in festive season, accelerating margins due to synergies with the acquired B2B business, and ongoing cost reduction programs.

"3PL Supply Chain services grew 4 per cent YoY driven by growth in automotive and engineering, consumer, and durables. Ecom volumes remained weak during the quarter and softness continued to roll over. However, the activity levels picked up towards the end of the quarter to prepare for a peak during the festive season in Q3," the management said.

MLL is an integrated third-party logistics (3PL) service provider, specialising in supply chain management and enterprise mobility. MLL serves over 400 corporate customers across various industries like Automobile, Engineering, Consumer Goods and E-commerce.

According to rating agency Icra, the strong business linkage with the Mahindra Group, particularly Mahindra & Mahindra (M&M), in the supply chain management (SCM) segment, provides MLL with the requisite experience, visibility on volumes, and a stable business avenue. Additionally, Icra believes these business linkages also enhance its strategic importance for M&M, meeting a large part of the Group’s logistics requirements.

The 'Stable' outlook reflects Icra's expectation that MLL will continue to enjoy strong financial flexibility as a part of the Mahindra Group and its strong linkages with the Group. Icra believes that MLL will maintain its current comfortable capital structure and liquidity profile.