Mahindra Logistics Ltd - Feb 2025 Earnings Call Transcript Analysis

February 3, 2025 · 4 min read

Earnings Call Transcript Analysis Report #

MLL Standalone (3PL/LMD): Rs 11.6 crores (marginally down from Rs 12.5 crores YoY)
Lords (Freight Forwarding): Rs 1.5 crores (up from Rs 0.4 crores YoY)
Express: Loss of Rs 24.8 crores (loss reduced compared to previous periods, but revenue down YoY from Rs 95.6 Cr to Rs 89.1 Cr)
Mobility: Rs 0.76 crores (down from Q3 FY24)
Whizzard (LMD): Rs 0.1 crores (vs Loss of Rs 0.8 crores YoY)
2x2 Logistics (Auto Outbound): Rs 2.1 crores (up from Rs 0.4 crores YoY)

Overall revenue growth driven significantly by the core 3PL/SCM business and acquisitions (like 2x2).
Warehousing shows robust YoY growth (14-15%).
Express business revenue declined YoY and was flat QoQ, remaining a major drag on profitability despite improved gross margins (from -13% to -5% over four quarters) due to cost actions.
Freight Forwarding saw revenue growth YoY but sequential pressure from lower pricing.
Core 3PL profitability (MLL Standalone PAT) slightly decreased YoY, potentially due to lower volumes in mature sites and startup costs for new sites impacting operating leverage.

No explicit revision of long-term guidance, but short-term expectations for Express breakeven pushed out. Management estimates needing 6,000-7,000 tons/month additional volume for Express EBITDA breakeven. For Rs 30-40 Cr incremental Express revenue, management expects ~Rs 14-15 Cr flow-through to EBITDA/PAT line (via contribution margin and line haul optimization).

Growth seen in Warehousing, Freight Forwarding (YoY), 2x2 Logistics. Decline (YoY Revenue) in Express and Mobility. Core 3PL revenue grew but PAT slightly declined.

New brand identity launched, integrating subsidiaries under one Mahindra Logistics umbrella. Launched eDelEAR emissions measurement platform.

Focus on ProTrucking (line haul transportation) showing strong momentum. Developing new offerings in Express (Air, Regional). Won contract for Noida International Airport mobility services.

Express business saw operational challenges (manpower shortage) during the festive peak impacting service levels and causing short-term volume churn. Actions taken to correct these issues. Rationalization of unprofitable customers/network points occurred in the Express business post-Rivigo acquisition. Focus on improving cash-to-cash cycle in Express.

Warehousing expansions in East (Kolkata/Guwahati) and West (Pune/Chakan) are ongoing, with >75% capacity already sold out. Technology upgrade of LOGIONE suite leveraging Gen AI, full release expected by end FY25.

Logistics sector is mixed, resilient but with muted YoY growth due to weaker consumption. High-cost environment persists (driver shortage, fuel, interest, tolls). Global trade volatility impacts freight pricing (Ocean correction early Q3, air softness, blank sailings). Robust warehousing demand, but longer construction lead times and customer deferments. E-commerce sees Quick commerce growth impacting supply chain design. Mobility shows seasonal trends (festive low B2B, high B2C/Airport). EV shift accelerating in Auto. Premiumization trend in Consumer Goods. Telecom CAPEX stable with 5G expansion.

Management believes Express volume churn was not due to market share loss but operational issues and customer volume softness. Acknowledged a “very tough market” for Express with tight pricing and price hikes not sticking. Aiming for strategic pricing, not a price war. Need ~1.2-1.3% market share gain for Express EBITDA breakeven.

Weaker consumption trends are a challenge across segments. Volatility in freight rates. Operational hurdles during peak season. Opportunity in new airports (Noida, Navi Mumbai) for Mobility. EV logistics growth.

Express business needs ~200 bps market share gain over 4 quarters for desired financial performance. Management believes this is achievable despite recent setbacks. Core 3PL business has a strong order book (>Rs 250 Cr pending ACV).

Express business turnaround is the biggest focus and challenge; Q3 performance was “weaker than expected” and flat QoQ despite order intake due to operational issues and churn. Core 3PL seeing lower volumes in mature sites due to consumption slowdown, impacting operating leverage. White space in warehousing (7%, ~1.5M sq ft) is higher than the target (3.5%).

Manpower availability/cost surges during festive peak impacted Express operations significantly in some locations. Higher lead times for warehouse construction.

Weak consumption trends persisting. Volatility in global freight markets and geopolitics. Competitive intensity and pricing pressure in the Express market.

Express business EBITDA breakeven is projected to be “still 2 quarters away at least”. Need 6,000-7,000 tons/month.

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