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Growth advantage overshadowed by weak margins

MAHLOG IN reported better-than-expected top-line performance with an 8% beat led by new client wins in contract logistics segment and healthy traction in B2B express business. However, EBITDA margin missed our estimate by 70bps as startup cost linked to new sites, fuel inflation and manpower issues impacted profitability. Nonetheless, margin headwinds are transitory and we expect recovery by 2HFY27E once new sites mature (1.5mn sq ft of warehousing space has been added in 1QFY27) and full benefit of fuel pass through clause materializes. Led by healthy traction in B2B express business and new client wins in contract logistics business we expect revenue CAGR of 15% over the next 2 years with EBITDA margin of 6.1%/6.5% in FY27E/FY28E. Retain BUY on the stock with a TP of INR507 (14x FY28E pre-IND AS EBITDA; no change in target multiple)

Top line increased by 23.3% YoY:

Consolidated revenue grew by 23.3% YoY to INR20,029mn (PLe INR18,487mn, CE INR18,391mn). Revenues from contract logistics/B2B express segment rose 25.9%/57.6% YoY to INR16,231mn/INR1,524mn respectively. However, revenues from freight forwarding/last mile delivery segment declined 38.6%/16.2% YoY to INR453mn/INR712mn respectively.

EBITDA margin of 5.8% with PAT at INR254mn:

EBITDA increased by 51.4% YoY to INR1,154mn (PLe INR1,192mn, CE INR1,133mn) with a margin of 5.8% (PLe 6.5%) compared to a margin of 4.7% in 1QFY26. EBITDA margin for contract logistics/freight forwarding/last mile delivery/mobility businesses stood at 6.9%/0.7%/3.7%/2.3% respectively, while EBITDA loss for the B2B express business narrowed to INR16mn in 1QFY27. PAT for the quarter stood at INR254mn (PLe INR242mn, CE INR231mn) as against a loss of INR108mn in 1QFY26. Higher other income of INR98mn (PLe INR55mn) aided PAT.

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