Mahindra Logistics - Strong Play On 3PL Business, Recommend 'Buy': Dolat Capital

Dolat Capital Report

Established in 2000, Mahindra Logistics Ltd. is one of India's largest third-party logistics player. Mahindra Logistics business can be categorized into three business segments –

1. 3PL contract logistics,

2. Network servicing (B2B Express, Freight Forwarding, and Last Mile Delivery) and

3. Mobility (Meru & Alyte).

The company is targeting Rs 85 billion revenue by FY26 with an expected compound annual growth rate of 18%. We see Mahindra Logistics as a long-term play, backed by:

1. potential growth opportunity in 3PL business led by strong volume growth from auto and non-auto sector,

2. Increasing scale and revival in margin of business-to-business express and freight forwarding business and

3. strong margin expansion led by cost optimization, scale and automation).

We forecast Ebitda/earnings per share CAGR of 26/88% over FY23-26E and value of the stock Rs 656 (25 times FY26E EPS).

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