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ICICI Securities Report
Mahindra Logistics Ltd.’s Q2 FY25 Ebitda performance undershot our/consensus estimates by 6.2%/23.6%. Key points:
Network services, which is ~18% of overall business, grew 46.1% YoY while third party logistics grew by 6.8%.
Gross margins improved for network services; however, it has declined to 10.4% in 3PL (11% in Q1 FY25) due to unabsorbed white space (~1.1 million square feet) and addition of contractual manpower for peak season.
Mahindra Logistics shall infuse Rs 500 million to support the cash burn at Rivigo; it needs ~35–40% volumes growth to achieve Ebitda break even, and target to become Ebitda positive by Q4 FY25, which seems daunting.
Given the H1 FY25 performance, we reduce our FY25E/FY26E EPS by 61.5%/6.8% and maintain Reduce with a revised target price of Rs 420 (earlier Rs 450).
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Also Read: Mahindra Finance Q2 Results Review - Elevated Credit Cost Impacted Earnings: ICICI Securities
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