Mahindra Logistics Limited — Q4 FY25 earnings call

Call held 24 Apr 2025

Management summary

Mahindra Logistics reported a mixed Q4 FY25, with consolidated revenue growing 8.2% YoY to ₹1,570 crores and EBITDA up 37% to ₹78 crores. The warehousing segment showed strong growth, securing 1 million sq ft of new contracts. However, the company recorded a consolidated loss of ₹6.8 crores, primarily driven by continued losses in the Express business, which management aims to bring to breakeven by Q2 FY26. The company also announced a leadership transition with Hemant Sikka appointed as the new CEO.

Highlights

  • Consolidated revenue grew 8.2% YoY to ₹1,570 crores.

  • Warehousing revenue increased 19% YoY to ₹297 crores in Q4.

  • EBITDA for Q4 grew 37% YoY to ₹78 crores.

  • Secured contracts for approximately 1 million square feet of additional warehousing space, expected to be fully occupied by Diwali.

  • 2x2 Logistics revenue grew 60% YoY to ₹24 crores with PAT of ₹3.3 crores.

Concerns

  • Consolidated losses for Q4 were ₹6.8 crores, primarily due to MESPL.

  • Express business revenue was ₹93.8 crores with losses of ₹23.7 crores.

  • Global trade volatility, project launch delays, and inflation continue to be headwinds.

  • Mobility revenues marginally down to ₹80 crores from ₹84 crores YoY.

Key financials

  1. Revenue ₹1,570 Cr +8.2%YoY
  2. EBITDA ₹78 Cr +37%YoY
  3. Consolidated Losses ₹6.8 Cr
  4. Gross Margin 9.5%
  5. Gross Margin (ex-Express) 10.3%

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
    ₹297 Cr Revenue Q4₹1,133 Cr Revenue FY
  • Supply Chain Management (3PL + Network Services)
    95.5% Share of Revenue
  • Mobility
    4.5% Share of Revenue₹80 Cr Revenue Q4₹1.3 Cr PAT Q4
  • Freight Forwarding
    ₹69.4 Cr Revenue Q4₹0.8 Cr PAT Q4
  • Express Business
    ₹93.8 Cr Revenue Q4₹23.7 Cr Losses Q4
  • ZipZap Logistics
    ₹42 Cr Revenue Q4₹0 Cr PAT Q4
  • 2x2 Logistics
    ₹24 Cr Revenue Q4₹3.3 Cr PAT Q4

Guidance & targets

Express Business

  • Volume for EBITDA breakeven Express Business · end of Q2 · Medium confidence 6,000 to 7,000 tons more per month
    So the way it works is every month every quarter, we have to add the volumes of 6,000 to 8,000 tons per month. And obviously, with some with the conversion ratio, we expect somewhere towards the end of Q2. As of now, I think we expect or we estimate that by the end of Q2, we should be in a position to get to that 6,000 tons to 7,000 tons gap.

    — Rampraveen S.

  • Volume growth Express Business · next year · Medium confidence mid- to high-teen growth year-on-year basis
    I think, it's the same thing which I mentioned earlier on to Alok that we are looking at probably a mid- to high-teen growth year-on-year basis what we laid out as some of the sales focus we are doing.

    — Rampraveen S.

Warehousing

  • Utilization of 1 million sq ft new space Warehousing · well before Diwali this year · High confidence fully utilized
    we expect them -- this 1 million square feet to be fully occupied well before Diwali this year.

    — Rampraveen S.

  • Total BTS space Warehousing · current · High confidence 5 million square feet
    Yes. And Krupa, Saurabh here. Just one thing to add, the 1-plus million square feet that you see in the deck, this is the last of our expansion in the BTS space. With this, we'll be at about 5 million square feet from a BTS perspective. And there are no further plans or sites that we have announced beyond these.

    — Saurabh Taneja

Profitability

  • Return on Equity (ROE) Profitability · long-term · Low confidence 18%-ish
    And with that, you can actually get an 18%-ish ROE, which is pretty attractive on the business portfolio.

    — Rampraveen S.

What to watch in Q1 FY26

Express business EBITDA breakeven volume

end of Q2
Current booked orders of around 5,000 tons per month
Target 6,000 to 7,000 tons per month

Why it matters

Achieving this volume is crucial for the Express business to become profitable and reduce consolidated losses.

we expect or we estimate that by the end of Q2, we should be in a position to get to that 6,000 tons to 7,000 tons gap.

Risks & concerns

  • Inflation, especially manpower costs

    high

    The logistics industry has a high dependence on migrant labor... we are seeing the pressure in terms of cost control and cost management.

    Management acknowledged

  • Competitive intensity and pricing pressure in Express business

    high

    Competition has increased, few players are cutting down the pricing and taking away the market share.

    Analyst acknowledged

  • Global trade volatility and tariff actions

    medium

    Global trade remains pretty volatile with all the tariff actions across the world led by the U.S. administration.

    Management acknowledged

  • Volatility in demand and pricing for forwarding business

    medium

    We do expect to see a period of volatility in demand and pricing probably through the first two quarters of this year at least.

    Management acknowledged

  • Project launch delays (stretched timelines)

    medium

    New project launches have been a challenge in terms of stretched out time lines compared to the past... now seeing like a 150-day rollout on most projects or and some even longer.

    Management acknowledged

  • Rural/urban divide challenge for logistics economics

    medium

    The economics of rural logistics is actually a challenge, especially in the context of per capita consumption or per capita product value or per capita shipment value.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Contract Logistics unabsorbed costs and new warehouse profitability Direct
I think, in the Contract Logistics business, we rarely we don't generally have unabsorbed capacity in that business. As a normal way of business, as you know, we build customized solutions for clients. And therefore, we don't generally have minimum guaranteed volumes.

Clarifies the company's approach to warehousing capacity and cost absorption, indicating custom solutions rather than speculative builds.

Asked by Amit Dixit

Rivigo (Express) volume for EBITDA breakeven and current run rate Direct
we expect or we estimate that by the end of Q2, we should be in a position to get to that 6,000 tons to 7,000 tons gap.

Provides a clear timeline and volume target for the Express business to reach profitability.

Asked by Amit Dixit

Express business YoY revenue decline and profitability outlook given market scenario Partial
It's not prices which are down, Alok, but I think yield is down based on retail versus enterprise versus some volumetric load shifts which have happened. 1.5% to 2% is still because volume is behind where we were in Q4.

Explains the reasons behind the Express revenue decline (yield, volume shifts) and reiterates confidence in sequential volume growth.

Asked by Alok Deora

FY26 tonnage growth expectation for the company Direct
Coming from the base we are in right now, we are probably looking at around mid-teens. So I think as I said, the 6,000 tons from where we exited the year is like a mid- to high-teens number.

Gives a specific growth outlook for the next fiscal year, indicating confidence in recovery.

Asked by Alok Deora

Confidence in warehousing whitespace fulfillment given mixed demand environment Direct
And what we have done is, I think, since the whitespace challenges started surfacing out in Q4 last year, actually, Q4 F '24, not Q4 F '25, after what was a very, very tepid e-commerce peak. And our customers decided to kind of take some of that space. As you know, Krupa, we've kind of really shut down a lot of expansion.

Addresses concerns about overcapacity in warehousing, explaining the company's cautious approach and focus on bespoke builds.

Asked by Krupashankar

Hemant Sikka's view on Express logistics and overall profitability in the medium term Evasive
I think it would not be appropriate for me to comment on Express logistics at this stage. I would still request Ram to take this question.

Highlights the new CEO's cautious approach to commenting on specific business segments immediately after joining, indicating a period of assessment.

Asked by Jainam Shah

Actual revenue share of integrated solutions and the low profitability margins in the logistics sector Direct
Our total solutions, Mayur, is around 23% to 25% of our revenue. In that 23%, approximately half or probably around 8% to 10% of the total revenue would be what we call really integrated solutions, right, which is where we are running an integrated network.

Provides a detailed breakdown of integrated solutions revenue and acknowledges the low-margin nature of the industry, emphasizing the need for differentiation.

Asked by Mayur Parkeria

Monetization or disposal of non-core assets for ROE improvement Partial
So we have an annual process to review our investments and decide based on that. Right now, there's nothing that has been decided, but we go through our strategy every year. And if there is any update on account of that, we'll share with all of you.

Indicates that while the company has a process for reviewing investments, no specific decisions on asset monetization have been made yet.

Asked by Mayur Parkeria

3 min read 6 chapters

Detailed narrative

Leadership Transition and Outlook

Dr. Anish Shah announced the resignation of Ram and the appointment of Hemant Sikka as the new CEO, effective April 22, 2025. Hemant Sikka, a veteran from Mahindra & Mahindra's Farm Equipment Sector, is expected to bring significant experience to realize the business's potential. Management expressed excitement about the new leadership and its potential to drive growth, especially given Sikka's background in supply chain leadership. The board sees tremendous potential in the business and believes the foundation built by Ram is strong.

Market Environment and Industry Trends

FY25 was challenging due to economic headwinds, regulatory uncertainties, and global disruptions, with anticipated relief not yet materializing. Major elections at both Central and State levels slowed consumption-driven growth. However, positive economic tailwinds like recent interest rate cuts and tax relief are expected to drive increased growth. The automotive sector, particularly SUVs, performed well, and rural demand showed growth, while FMCG faced sustained slowdown and inflationary pressures, leading to a focus on cost control.

Q4 and FY25 Financial Performance Overview

Consolidated revenue for Q4 FY25 grew 8.2% YoY to ₹1,570 crores, with EBITDA increasing 37% YoY to ₹78 crores. However, the company reported a consolidated loss of ₹6.8 crores for the quarter, primarily due to the Express business (MESPL) which recorded losses of ₹23.7 crores. Gross margin stood at 9.5% for Q4, improving from 9.4% in the previous year, and 10.3% excluding the Express business. MLL standalone revenue was ₹1,293 crores, up 9.3% YoY, with PAT of ₹13.1 crores.

Warehousing Business Expansion

The warehousing segment demonstrated strong performance, with Q4 revenue growing 19% YoY to ₹297 crores and full-year revenue increasing 15% to ₹1,133 crores. The company secured contracts for approximately 1 million square feet of additional warehousing space, expected to be fully occupied by Diwali. This expansion includes facilities in Kolkata (4 lakh sq ft, half commissioned), Phaltan (3.3 lakh sq ft, fully sold out), Agartala (1 lakh sq ft), and Pune (4.5 lakh sq ft), with Phaltan already fully sold out and operational.

Express Business Turnaround Efforts

The Express business (MESPL) saw its losses shrink to ₹23.7 crores in Q4, with revenue at ₹93.8 crores. Management is focused on achieving EBITDA breakeven by the end of Q2 FY26, requiring an additional 6,000 to 7,000 tons of monthly volume. Efforts include expanding sales organization coverage, leveraging synergies with other MLL businesses, and tailoring offerings for regional distribution and quick commerce. The company aims for mid- to high-teen volume growth in the Express segment for the next year.

Integrated Solutions and Strategic Focus

The company emphasizes integrated logistics solutions, with 23-25% of total revenue coming from total solutions and 8-10% from 'really integrated solutions' that involve running an integrated network. The strategy involves expanding the network, investing in technology, and focusing on operational strengths to differentiate in a fragmented industry. Management believes that as supply chains become more efficient, the shift towards part-truckload will continue, and the company aims for an 18%-ish ROE in the long term through disciplined capital allocation and differentiated offerings.

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