Mahindra Logistics Limited — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

Mahindra Logistics reported a 14% YoY revenue growth to INR 1,625 crores in Q1 FY26, driven by strong performance in warehousing and 3PL wins. Despite overall EBITDA growth, the company recorded a net loss of INR 10.8 crores, primarily due to yield pressure in the Express business. Management is focused on optimizing white space, improving Express business profitability through better yield, and deleveraging via a rights issue, aiming for debt-free status and significant interest cost savings.

Highlights

  • Revenue of INR 1,625 crores, up 14% YoY.

  • Warehousing segment revenue grew 18% YoY to INR 306 crores.

  • EBITDA for the quarter stood at INR 76.3 crores, up 14.9% from INR 66.3 crores in Q1 FY25.

  • Strong momentum in 3PL wins with 135% QoQ growth.

  • MESPL volumes rose 10%, showing continued strength in specialized logistics.

  • Express business tonnage increased nearly 10% sequentially.

Concerns

  • PAT loss for Q1 FY26 was INR 10.8 crores.

  • Express business PAT loss stood at INR 23.9 crores due to yield pressure.

  • Whizzard PAT was negative INR 0.1 crores (loss of INR 10 lakh).

  • Muted industrial output, SME caution, and rising competition in B2B express and surface transport.

  • Approx. 1.5 million sq ft of warehousing white space still exists, incurring costs.

Key financials

  1. Revenue ₹1,625 Cr +14%YoY
  2. Gross Margin 9.4%
  3. EBITDA ₹76.3 Cr +14.9%YoY
  4. PAT ₹-10.8 Cr

What they filed

Q1 FY27: revenue up 23.3%, net profit up 411.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,521 1,594 1,570 1,625 1,685 +11%1,898 +19%1,791 +14%2,003 +23%
EBITDA66 74 78 76 85 +29%103 +39%112 +44%115 +51%
Net profit-10 -7 -5 -9 -8 +20%6 +186%22 +540%28 +411%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Warehousing Segment
    ₹306 Cr Revenue
  • Supply Chain Management (3PL & Network Services)
    95% Share of Revenue
  • Mobility Business
    5% Share of Revenue
  • MLL Standalone
    ₹1,346 Cr Revenue₹6.4 Cr PAT
  • Lords Freight
    ₹74 Cr Revenue₹0.9 Cr PAT
  • Express Business
    ₹101 Cr Revenue₹23.9 Cr PAT Loss
  • Mobility Entity
    ₹82 Cr Revenue₹4.6 Cr PAT
  • Whizzard
    ₹43 Cr Revenue₹0.1 Cr PAT Loss
  • 2x2 Logistics
    ₹24 Cr Revenue₹3.1 Cr PAT
  • Revenue Split (Auto vs Non-Auto)
    63% Auto Sector Revenue37% Non-Auto Sector Revenue
  • Revenue Split (Mahindra vs Non-Mahindra)
    56% Mahindra Revenue44% Non-Mahindra Revenue

Capital allocation

high confidence
  • Capex Capex disclosed
    Our strategy going forward is that we look at the returns from each of these capex. We have a very rigorous capital allocation process, There is no guidance that I can give, but we expect to be in the normalized range of 1.5% that we used to be earlier. In fact, our idea will be to even optimize further on that and invest only where the returns are solid.
  • Debt Gross ₹604.06 Cr
    • Repayment Partial or full repayment of select borrowings availed by the company and its subsidiaries (MLL Express Services Private Limited and V-Link Freight Services Private Limited) using proceeds from rights issue. ₹556.3 Cr
    As on June 30, 2025, our total outstanding borrowings stood at INR 604.06 crores.
  • Liquidity Liquidity disclosed Balance proceeds from the rights issue (approx. INR 187 crores) to be deployed for general corporate purposes and strategic initiatives.
    The balance proceeds from the issue will be deployed through our general corporate purposes, and this will provide us with the necessary headroom to support our ongoing operational and strategic initiatives.

Guidance & targets

Debt

  • Debt status Debt · post rights issue · High confidence debt-free
    So the company will become debt-free with this.

    — Hemant Sikka

Interest Cost

  • Annual interest cost savings Interest Cost · Annually · High confidence INR 40-45 crores
    This repayment initiative is expected to result in significant annual interest cost savings in the range of INR40 crores to INR45 crores, thereby improving our overall financial efficiency and strengthening future cash flows.

    — Saurabh Taneja

Warehousing

  • White space reduction Warehousing · near term, post Q2 · Medium confidence meaningful progress
    We expect very meaningful progress to unfold this priority in the near term. And we are very confident that this problem will be solved in a very timely manner.

    — Hemant Sikka

Express Business

  • Volume growth Express Business · going forward · Medium confidence sustain this kind of growth
    I would really target, Ankita, to sustain this kind of growth. This is a very big focus area for us.

    — Hemant Sikka

Capex

  • Capex as % of revenue Capex · going forward · Medium confidence 1.5%
    we expect to be in the normalized range of 1.5% that we used to be earlier.

    — Saurabh Taneja

What to watch in Q2 FY26

White Space Reduction Progress

Post Q2, next quarter
Current Approx. 1.5 million sq ft of white space
Target Continued reduction in white space

Why it matters

Directly impacts cost efficiency and revenue generation from existing assets.

you will start seeing post quarter 2 results in every quarter call that we have with you that the number will continue to go down.

Risks & concerns

  • Express Business Profitability / Yield Pressure

    high

    Despite volume growth, yield continues to be under pressure, leading to PAT loss in the Express segment. Management is shifting focus to profitable loads.

    Management acknowledged

  • Warehousing White Space

    medium

    Approximately 1.5 million sq ft of unutilized warehousing space exists, incurring costs and impacting efficiency. Management has made its reduction a key priority.

    Management acknowledged

  • Macroeconomic Slowdown / Sector-specific Headwinds

    medium

    Muted industrial output, SME caution, and specific auto segments (passenger vehicles, commercial vehicles) facing soft growth, though offset by growth in tractors and e-commerce.

    Management acknowledged

  • Competitive Intensity in B2B Express

    medium

    The market is competitive, making it difficult to increase prices while maintaining volumes. Focus is on service quality and strategic customer acquisition.

    Management acknowledged

Q&A highlights

4 direct
Express business profitability and breakeven timeline despite volume growth. Partial
So while we have seen that our volumes have gone up, but our yield continues to be under pressure. And that's what we are focusing now in the quarters to come. We are giving away business where our yield is not good and trying to get customers which give us a better, let's say, rupee per kg kind of a yield.

Highlights the core challenge in the Express segment (yield vs. volume) and management's strategic shift towards profitable loads, impacting the breakeven timeline.

Asked by Alok Deora

Sustainability and drivers of Express business volume growth. Direct
I would suggest that we are -- I think we have only 3% of the market share in B2B Express business. So it is actually not that if the industry slows down and we have to slow down. I mean, there is so much more that we can still do. So the growth that we are seeing is, I think, because of better execution by our team and going and meeting more customers, being able to connect with more customers.

Explains that growth is driven by market share gains and execution, not just market tailwinds, indicating internal improvements.

Asked by Ankita Shah

Scaling capacity in Contract Logistics given diversified demand. Partial
It's very difficult to answer this because the capacity is very diversified. It is spread across geographies, it is spread across verticals. I mean, as I told you, auto industry overall, I'm sure you are also tracking, is feeling a slowdown, whereas the tractor industry continues to grow double digit. E-commerce is doing exceptionally well.

Reveals the complexity of capacity utilization due to diverse client needs and sector-specific demand fluctuations, making a simple scaling answer difficult.

Asked by Ankita Shah

Primary uses of rights issue funds and impact on profitability. Direct
About INR560 crores out of this, we are looking to utilize, as Hemant shared earlier, to repay the debt that we have... And then we still are left with a large pool of about INR187 crores, which has been attributed to general corporate purpose. That is something that we intend to utilize to fuel growth.

Clearly outlines the capital allocation plan for the rights issue, primarily debt reduction and future growth funding, with a quantified interest cost saving.

Asked by Jayshree Bajaj

Strategy for reducing warehousing white space and associated costs. Direct
Our view is with the kind of focus that we have put, and you would have noted in my opening comments, I said this is a key goal in my own Goal sheet that I have kept for myself, and this goal carries to all of the CLT members. So obviously, there is a renewed focus on getting the white space off our table.

Emphasizes management's strong commitment and focused execution plan to address the white space issue, which is currently incurring costs.

Asked by Jinesh Joshi

Express business breakeven revenue target. Partial
I think it's the quality of revenue that matters... But the yield from some of these newer customers has been low, which means the revenue also is a derivation of the yield itself. So we wouldn't sort of call out any number in terms of revenue. I think it will be a quarter or 2 where we will start seeing the quality of revenue that we have, where we'll have a better clarity what number would be the right number to get to EBITDA breakeven.

Management clarifies that revenue volume alone isn't the metric for breakeven; yield quality is key, and they need a couple more quarters to determine a clear revenue target for breakeven.

Asked by Jinesh Joshi

Promoter participation in the rights issue. Direct
But just in case we are in that situation, we have support from our parent where the remaining shares will be subscribed.

Provides assurance regarding the successful subscription of the rights issue, even if public participation is lower than expected.

Asked by Jinesh Joshi

Capex strategy and ROCE thresholds. Partial
Our strategy going forward is that we look at the returns from each of these capex... There is no guidance that I can give, but we expect to be in the normalized range of 1.5% that we used to be earlier.

Asked by Achal Lohade

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Mahindra Logistics reported a 14% year-on-year revenue increase to INR 1,625 crores for Q1 FY26. The warehousing segment showed robust growth of 18% YoY, reaching INR 306 crores. Consolidated EBITDA stood at INR 76.3 crores, up from INR 66.3 crores in Q1 FY25, reflecting a 14.9% growth. However, the company recorded a net loss of INR 10.8 crores for the quarter, primarily due to challenges in the Express business.

Express Business Challenges and Strategic Shift

The Express business recorded a revenue of INR 101 crores, up from INR 89 crores in Q1 FY25, but incurred a PAT loss of INR 23.9 crores. Management noted that while volumes increased by nearly 10% sequentially, yield remains under pressure. The strategic focus is shifting from pure volume growth to acquiring customers that offer better yield (rupee per kg), with an aim to improve profitability in the coming quarters and achieve breakeven.

Warehousing White Space Optimization

The company currently manages 21 million square feet of warehousing space, with approximately 1.5 million square feet identified as white space. Management has made reducing this white space a key strategic priority, with focused execution plans. They expect meaningful progress to unfold in the near term, with the number of unutilized spaces projected to decrease post Q2 FY26, thereby improving asset utilization and reducing costs.

Capital Restructuring via Rights Issue

Mahindra Logistics announced a rights issue to raise approximately INR 750 crores. Of this, an estimated INR 556.3 crores will be used for partial or full repayment of existing borrowings across MLL Standalone, MLL Express Services, and V-Link Freight Services. This debt reduction is expected to result in annual interest cost savings of INR 40-45 crores, with the company aiming to become debt-free. The remaining INR 187 crores will be allocated for general corporate purposes and strategic initiatives.

Contract Logistics Expansion & New Wins

The company reported strong momentum in 3PL wins, with a 135% quarter-on-quarter growth, indicating increased customer confidence. They also went live with 10 new projects across manufacturing and e-commerce. New warehousing contracts with Mahindra & Mahindra include a 3 lakh square feet facility in August, another 80,000 sq ft in September, 300,000 sq ft in Nashik, and 100,000 sq ft in Haridwar, demonstrating robust growth in this segment.

Sectoral Trends and Diversification Efforts

Q1 FY26 saw mixed trends, with headwinds from muted industrial output and caution in SME segments. While passenger vehicles and commercial vehicles experienced soft growth or decline, the tractor segment grew by 8%. The company is actively diversifying its revenue mix, with 37% now coming from non-auto sectors, and e-commerce showing strong growth and demand for micro-fulfillment hubs, contributing to overall resilience.

Organizational Restructuring for Focused Growth

To enhance focus and execution, the company is transitioning its consumer and manufacturing verticals into independent units, each led by dedicated vertical heads. Additionally, the Whizzard and LMD (last-mile delivery) businesses have been integrated into a simplified, unified structure under a single leader. This restructuring aims to improve synergy, reduce costs, and enhance customer experience across these key business areas.

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