Mahindra Logistics Limited — Q2 FY26 earnings call

Call held 28 Oct 2025

Management summary

Mahindra Logistics reported a robust Q2 FY26 with an 11% YoY revenue growth to ₹1,685 crores and a notable expansion in consolidated gross margin to 10.1%. The company successfully deleveraged its balance sheet, reducing consolidated debt to ₹73 crores, and achieved a significant turnaround in its Express business by making it gross margin positive. However, profitability was impacted by a one-time doubtful debt provision, and the last-mile delivery segment continues to navigate pricing pressures.

Highlights

  • Revenue of ₹1,685 crores, up 11% YoY, driven by e-commerce and M&M Auto and Farm businesses.

  • Consolidated gross margin expanded to 10.1% in Q2 FY26 from 9.2% in Q2 FY25, driven by favorable business mix, customer mix, and volume leverage.

  • Express business achieved gross margin positive for the first time since acquisition, reaching 0.2% in Q2 FY26 compared to -5.2% in Q2 FY25.

  • Consolidated debt significantly reduced from ₹601 crores at Q1 end to ₹73 crores at Q2 end, leading to expected annual interest cost savings of ₹40-45 crores.

  • White space was reduced by over 20% in the last quarter, with the company on track to reduce white space cost by approximately 95% by September 2026.

Concerns

  • A one-time charge of ₹4.8 crores was recognized for Provisions for Doubtful Debts due to the bankruptcy filing of a 3PL customer.

  • The Express business, despite achieving gross margin positivity, still reported a PAT loss of ₹20 crores in Q2 FY26.

  • Customer-driven pricing pressure continues to be a concern in the last-mile delivery segment, leading to strategic decisions on customer mix.

Key financials

  1. Revenue ₹1,685 Cr +11%YoY
  2. Warehousing Revenue ₹333 Cr +20%YoY
  3. Consolidated Gross Margin 10.1%
  4. EBITDA ₹85.1 Cr
  5. PAT Loss ₹-10.4 Cr
  6. One-off PDD Charge ₹4.8 Cr
  7. Consolidated Gross Debt ₹73 Cr
  8. Depreciation ₹72 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

SegmentRevenuePAT
Supply Chain Management (SCM)₹1,367 Cr₹3.8 Cr
Freight Forwarding₹90.2 Cr₹1.7 Cr
Express Business₹104.4 Cr—
Mobility₹93.8 Cr₹1.6 Cr
Whizzard (Last-Mile Delivery)₹68.4 Cr₹1.07 Cr
2x2 Logistics (Car Carrier)₹23.4 Cr₹1.7 Cr
Auto Business Contribution——
Mahindra Business Contribution——

Capital allocation

high confidence
  • Debt Gross ₹73 Cr
    • Repayment Repayment of debt using proceeds from rights issue, reducing consolidated debt from ₹601 crores to ₹73 crores. ₹528 Cr
    The proceeds have been prudently utilized towards the repayment of debt, resulting in a stronger balance sheet. As a result, we have reduced our consolidated debt obligation from INR601 crores at the end of quarter 1 to INR73 crores at the end of quarter 2. This will help us realize interest cost savings of INR40 crores to INR45 crores per annum.
  • Liquidity Cash ₹187 Cr Remaining proceeds from rights issue available for general corporate purposes.
    In addition, INR187 crores remains available from rights issue proceeds for general corporate purposes aligned with the objects of the offer.

Guidance & targets

Cost Reduction

  • White Space Cost Reduction Cost Reduction · by September 2026 · High confidence 95%
    And I remain committed to our target, which I had shared last time in the call that by September of next year we will reduce our white space cost by about 95%.

    — Hemant Sikka

Profitability

  • Express Business EBITDA Profitability · as soon as possible · Medium confidence EBITDA positive
    Obviously, the next target for us remains as the EBITDA positive. The team is working very hard. We have several more levers which we have pressed in the last five months, six months where the results will begin to apply.

    — Hemant Sikka

Cost of Debt

  • Interest Cost Savings Cost of Debt · per annum · High confidence ₹40-45 crores
    This will help us realize interest cost savings of INR40 crores to INR45 crores per annum.

    — Isha Dalal

Depreciation

  • Quarterly Depreciation Run Rate Depreciation · future years · High confidence ₹72 crores
    The depreciation largely pertains to the cost of our leases under Ind AS 116. Given that our warehouse cost is largely fully built out, we expect the depreciation component of that to stay more or less constant for corresponding quarters in the future years.

    — Isha Dalal

Geographic Focus

  • Alyte Prive Focus Geographic Focus · whole of next year · High confidence NCR
    We have launched Prive service only in the region of Delhi NCR, and we have expansion plans now for Noida International Airport. There is a lot of growth that can be achieved in NCR, and we will keep the Prive focus on NCR for the whole of next year.

    — Hemant Sikka

Warehouse Expansion

  • New BTS Space Additions Warehouse Expansion · near future · High confidence No new BTS space planned
    So, no new BTS space addition is being planned. All the space which has come in on stream in this quarter were all earlier committed, which is mostly in the East of India, to be specific in Calcutta, Guwahati, Agartala, these kinds of places. We have released a press release on that earlier a few weeks back. So these are all pre-committed, which have come on stream. We have no plans to add in the near future any BTS space.

    — Hemant Sikka

What to watch in Q3 FY26

Express Business EBITDA Positivity

as soon as possible (next few quarters)
Current PAT loss of ₹20 crores, GM positive (0.2%)
Target EBITDA positive

Why it matters

Key indicator of the successful turnaround of the acquired Rivigo business and its contribution to overall profitability.

Obviously, the next target for us remains as the EBITDA positive. The team is working very hard. We have several more levers which we have pressed in the last five months, six months where the results will begin to apply.

Risks & concerns

  • Customer-driven pricing pressure in last-mile delivery

    medium

    Customer-driven pricing pressure continues to be a concern in last-mile delivery, leading to strategic decisions on customer mix.

    Management acknowledged

  • Global challenges impacting freight forwarding

    low

    Global challenges, headwinds, tariffs, and geopolitical challenges impact freight forwarding, but a diverse customer portfolio ensures revenue stability.

    Management acknowledged

  • GST-related disruptions

    low

    GST disruption was severe for the industry until September 22nd, muting business activity for 3-4 weeks prior, but considered a one-off event.

    Management acknowledged

Q&A highlights

8 direct
Express Business Profitability Targets Direct
Obviously, the next target for us remains as the EBITDA positive. The team is working very hard. We have several more levers which we have pressed in the last five months, six months where the results will begin to apply.

Clarifies the immediate financial goal for the recently acquired and now GM-positive Express business, indicating management's focus on turning it around.

Asked by Jainam Shah

White Space Reduction vs. Rental Costs Direct
This is our peak capacity kind of in terms of BTS space, as we call it, which is build-to-suit. A lot of our white space is actually coming out of our BTS space, which is our ready to move., We don't have any white space at all there. So, when you look at rental, you may think about two big buckets in it. One is RTM, the other is BTS. So, BTS, whatever was committed because BTS doesn't happen overnight, whatever was committed, let's say, a year, year and half back, everything has come on stream, and all that rental cost is already now in the quarter two results.

Addresses a key concern about rising rental costs despite white space reduction, explaining that new committed BTS spaces have come online, leading to a peak in rental costs, which are expected to decline as white space is further utilized.

Asked by Jainam Shah

Debt Repayment Strategy and Remaining Cash Direct
The balance money we have kept for general corporate purposes, which we have also done. So, we have INR187 crores, which you correctly pointed out that we have retained for general corporate purposes. Coming to your question of the balance debt that we have, some of this debt lies in one of our subsidiaries, which is the 2x2 Logistics business. This is largely long-term debt that we have taken in the subsidiary for acquisition of vehicles.

Clarifies the allocation of rights issue proceeds, explaining why not all debt was repaid and the nature of the remaining consolidated debt.

Asked by Jinesh Joshi

Discrepancy in Last Mile Delivery Revenue Reporting Direct
So, our last mile delivery operations run both out of our stand-alone entity as well as out of the Whizzard subsidiary. So, what you see against Whizzard belongs to the Whizzard subsidiary. It is a business that we run out of there. And the last mile delivery business total number refers to the total business that we are running.

Resolves a potential confusion in financial reporting by explaining the different components of last-mile delivery revenue.

Asked by Jinesh Joshi

Express Business Profitability vs. Investments Direct
So one of the largest offsetting impacts is, you know, as we infused money into this entity and there was an increase in share capital, there are some one-off expenses in the entity pertaining to share capital increase. That's largely the only one-off. But otherwise, as gross margin continues to strengthen, you will see most of that benefit flow down to the EBITDA and therefore, the PAT level.

Explains why Express business EBITDA is still a loss despite GM positivity, attributing it to one-off expenses related to capital infusion, and reiterates the expectation of GM flow-through to profitability.

Asked by Achal

Future Depreciation Run Rate Direct
That's correct. That's what I mentioned. So, I'll again clarify. The depreciation largely pertains to the cost of our leases under Ind AS 116. Given that our warehouse cost is largely fully built out, we expect the depreciation component of that to stay more or less constant for corresponding quarters in the future years.

Provides clarity on the expected stability of depreciation costs, which is a significant component due to Ind AS 116 and the completion of warehouse expansion.

Asked by Nishita

Express Business Yield Improvement and Market Share Direct
No, we have not gained market share if that's what you mean. ... I think there our improvement is on a very thought through strategy of improving our customer mix and that is helping us to improve our yield per kg. And that is what we are trying to do. I mean you can pick up any load as you want, but that is not our target. Our target is to pick up high-quality loads.

Clarifies that the Express business's improved performance is due to yield management and customer mix optimization rather than market share gains, highlighting a strategic shift towards profitable growth.

Asked by Achal

Future Warehouse Expansion Strategy Direct
So, no new BTS space addition is being planned. All the space which has come in on stream in this quarter were all earlier committed... We have no plans to add in the near future any BTS space. However, if some client comes in and gives to us a back-to-back kind of a commitment, we will consider that. But broadly, expansion will happen is by RTM ready to move, where there are no long-term commitments to any landlord.

Outlines the company's cautious approach to future warehouse expansion, focusing on ready-to-move (RTM) spaces without long-term commitments, indicating a shift from large build-to-suit (BTS) projects.

Asked by Ankita Shah

3 min read 7 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Mahindra Logistics reported a robust Q2 FY26 with revenue growing 11% year-on-year to ₹1,685 crores, primarily driven by e-commerce and the M&M Auto and Farm businesses. The consolidated gross margin expanded to 10.1% in Q2 FY26 from 9.2% in Q2 FY25, attributed to a favorable business mix, customer mix, and volume leverage. EBITDA for the quarter stood at ₹85.1 crores, an increase from ₹66.4 crores in Q2 FY25, while the PAT loss marginally improved to ₹10.4 crores, despite a one-time charge of ₹4.8 crores for doubtful debts.

Debt Reduction and Capital Structure

Following a successful rights issue of ₹749 crores, the company significantly reduced its consolidated debt from ₹601 crores at the end of Q1 to ₹73 crores by the end of Q2 FY26. This substantial deleveraging is projected to result in annual interest cost savings of ₹40-45 crores. The remaining ₹187 crores from the rights issue proceeds are allocated for general corporate purposes. The outstanding ₹73 crores in consolidated debt primarily represents long-term debt in the 2x2 Logistics subsidiary, used for vehicle acquisition.

Express Business Turnaround and Profitability

The Express Logistics business achieved a significant milestone by becoming gross margin positive for the first time since its acquisition, reaching 0.2% in Q2 FY26 compared to -5.2% in Q2 FY25. The segment's revenue grew 14% year-on-year to ₹104.4 crores, supported by a 7% increase in volume and improved yields. Despite this operational improvement, the Express business still reported a PAT loss of ₹20 crores, an improvement from ₹24 crores in Q2 FY25, with one-off expenses related to share capital increase impacting the bottom line.

Operational Efficiency and Cost Optimization

Mahindra Logistics has undertaken a 360-degree review of its operations, resulting in a 20%+ reduction in white space during the last quarter. The company is on track to achieve its target of reducing white space cost by approximately 95% by September 2026. Management emphasized disciplined cost optimization, stringent control over overheads, and strategic recalibration of the business portfolio, including renegotiating or exiting adverse contracts. The company also operationalized 8 new projects across manufacturing and e-commerce and launched a 3 lakh sq ft facility in Nashik.

Warehouse Expansion and Depreciation Outlook

The company's warehouse network is now largely built out, with the current quarter reflecting peak rental costs due to previously committed build-to-suit (BTS) spaces coming online, including new facilities in the East (Guwahati, Agartala) and Nashik. Consequently, the depreciation component, largely driven by Ind AS 116 leases, is expected to stabilize at approximately ₹72 crores quarterly going forward. Future warehouse expansion will primarily focus on ready-to-move (RTM) spaces, avoiding long-term landlord commitments unless backed by specific client agreements.

Mobility and Last-Mile Delivery Performance

The Mobility segment demonstrated strong growth, with revenue increasing 16% year-on-year to ₹93.8 crores and achieving a PAT of ₹1.6 crores. The company successfully launched Alyte Prive, a premium B2C mobility service, in Delhi NCR, with plans for expansion to Noida International Airport. The last-mile delivery business (Whizzard) also grew its revenue to ₹68.4 crores and reported a PAT of ₹1.07 crores, but continues to navigate customer-driven pricing pressure, prompting strategic adjustments to its customer mix to maintain margins.

Industry Outlook and Strategic Focus

Mahindra Logistics noted a positive industry outlook, supported by increasing domestic resilience, government infrastructure push, and rapid expansion in e-commerce and quick commerce. Despite global headwinds affecting the freight forwarding business, the company's diverse customer portfolio ensures revenue stability. For the second half of the fiscal year, management's strategic focus remains on yield improvement, operational excellence, customer retention, and network optimization, aiming to establish MLL as India's leading integrated logistics company.

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