Recently, while screening for stocks for our Premium Members, I came across Mahindra Logistics.
In general, Mahindra Group has done well for shareholders; however, Mahindra Logistics has performed badly since it got listed in Nov’17.
What’s interesting though is that recently there’s been management change and Hemant Sikka, 25+ years in Mahindra Group, has taken charge as MD & CEO. Also, in Jul’25, the company came out with a Rs 750 crore rights issue that will be used for deleveraging the balance sheet with annual interest savings of Rs 40-45 crore.
Below, we have shared notes from Q1 FY 26 concall of the company to understand management’s perspective on turnaround plans for the company.
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Mahindra Logistics Q1 FY 26 concall notes
Source: Mahindra Logistics Jul’25 presentation
Management & Strategic Direction
- New CEO & Focus: Hemant Sikka (recently appointed MD & CEO) led the call, emphasizing his focus on “execution, execution, and execution,” especially around operational excellence, cost productivity, and value creation.
- Structural Changes: The company restructured key business verticals—split the Consumer and Manufacturing verticals to have dedicated leaders, and integrated Whizzard and Last Mile Delivery (LMD) into one unified vertical.
Financial Performance (Q1 FY26)
- Revenue:
- Consolidated revenue up 14% year-on-year to Rs 1,625 crore.
- Warehousing segment revenue at Rs 306 crore, up 18% YoY.
- Supply chain management (3PL & network services) contributed 95% of revenue; Mobility business contributed 5%.
- Margins:
- Consolidated gross margin at 9.4% vs 9.5% in Q1 FY25.
- Gross margin excluding MESPL business at 11.6%.
- EBITDA stood at Rs 76.3 crore (up from Rs 66.3 crore YoY).
- Q1 FY26 posted a consolidated net loss of Rs 10.8 crore.
- Entity Highlights:
- MLL Standalone: Revenue Rs 1,346 crore, PAT Rs 6.4 crore (down from Rs 10.2 crore).
- Lords Freight: Revenue Rs 74 crore, PAT Rs 0.9 crore (down from Rs 1.9 crore).
- Express (MESPL): Revenue crossed Rs 100 crore for the first time (Rs 101 crore), PAT loss of Rs 23.9 crore. Volumes up 10% sequentially, but profitability under pressure due to yield issues.
- Mobility: Revenue Rs 82 crore, PAT Rs 4.6 crore.
- Whizzard: Revenue Rs 43 crore, PAT loss Rs 0.1 crore.
- 2×2 Logistics: Revenue Rs 24 crore, PAT Rs 3.1 crore.
- Sector Mix: 63% Auto, 37% Non-Auto. Revenue from Mahindra Group at 56%, non-Mahindra at 44%.
Business and Segmental Insights
3PL & Contract Logistics
- 3PL wins surged 135% QoQ, and 10 new projects launched in manufacturing and e-commerce.
- Expanded warehousing operations, including a new 3.34 lakh sq.ft. facility for Cummins in Phaltan (recently awarded “Supplier of the Year” by Cummins India).
- Ongoing focus on reducing warehousing “white space” (~1.5 million sq.ft. unutilized capacity) with high-level management attention. No further expansion until existing space is utilized.
Express Business
- Volumes continued an upward trend (10% sequential growth), but yield remains pressured. Profitability is contingent on disciplined client acquisition and yield management, not just tonnage growth.
- The business aims to pivot away from low-yield customers and improve yield/quality of revenue.
- Losses are expected to narrow as the company builds scale and shifts customer mix—management reaffirmed belief in the long-term B2B express opportunity, despite near-term losses.
Non-Auto and E-Commerce
- Diversification into non-auto segments (e.g., e-commerce, FMCG) is growing. Multiple new warehousing contracts signed in August and September, especially in auto (Mahindra) and non-auto segments.
- E-commerce and Q-commerce client capacity demands are rising, especially ahead of the festive season.
Capital Structure & Rights Issue
- Rights Issue: Announced a Rs 749 crore rights issue at Rs 277/share (substantial discount to market). The bulk (Rs 560 crore) will be used for debt repayment across MLL, MESPL, and V-Link, potentially making the company debt-free and saving Rs 40-45 crore annually in finance costs. The remainder (Rs 187 crore) will fund general corporate growth.
- Borrowings: As of June 30, 2025, outstanding debt at Rs 604 crore (mix of term loans, WC facilities, ICDs).
Capex & Cost Focus
- Capex approach: Historically at 1.5% of revenue (Rs 60-70 crore), with FY 25 being an exception (Rs 180 crore due to fleet and strategic project expansion). Moving forward, capital allocation will be even more rigorous, with a target to optimize or reduce this ratio.
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