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Result Highlights

* Mahindra logistics reported topline of Rs.9.7 bn (+20% yoy), lower than our estimate of Rs.10.5 bn.  

* While Supply Chain Management (SCM) segment grew ~29% yoy, Enterprise Mobility (EM) division continued to struggle with revenue declining ~56% yoy. The performance in the EM segment was likely hit as large part of clients’ employees continued to work from home (leading to lesser requirement of transportation).

* The Company reported EBITDA of Rs462 mn, (+21% yoy). Margins came flat yoy at 4.7% in Q4 FY21.  

* During the quarter, the group has recognized an aggregate impairment loss of Rs. 27.5 mn related to investment in joint venture.

* The company paid Rs 2.5/share dividend for FY21

Our view: Q4 has been a mixed bag where Transportation segment has done reasonably well but warehousing segment has struggled. Going forward, we believe MLL’s growth would be driven by growth in End use segments and how the new initiatives like Flex Warehousing solutions and EDEL (last mile delivery) play out. We largely retain our estimates for FY23 and retain our negative stance on the stock. While several new initiatives are being undertaken (like providing integrated solutions and value‐added services), we believe the positives are priced in at current levels (trades at 40x FY23 EPS). We would await better entry point and retain SELL to target price of Rs.424.

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