Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mahindra Logistics Ltd (NSE:MAHLOG, Financial) reported a 14.1% year-on-year increase in revenue for Q3, reaching INR 1,594.2 crores.
- The warehousing segment saw a 15% year-on-year growth, contributing approximately INR 300 crores to the revenue.
- The company secured new orders worth INR 100 crores in the 3PL business and has a pending order board of over INR 250 crores.
- The mobility business won a key contract for the new Noida International Airport, indicating future growth potential.
- Mahindra Logistics Ltd (NSE:MAHLOG) launched a new analytics platform for emissions measurement, enhancing its service offerings and sustainability focus.
Negative Points
- The logistics sector faced challenges due to high costs driven by driver shortages, elevated fuel prices, and higher toll charges.
- The Express business experienced flat volumes sequentially, with operational challenges during the festive peak affecting service levels.
- The company reported a loss of INR 9 crores at a consolidated level for Q3, indicating financial pressure.
- The freight forwarding business was impacted by lower pricing in Q3, affecting revenue per TEU.
- The Express business continues to face a tough market environment, with competitive pricing and operational issues impacting growth.
Q & A Highlights
Q: Can you clarify the nature of the INR250 crores order book and the INR100 crores worth of new contracts in the 3PL business? Are these annual or lifetime values?
A: These are annual contract volumes, representing a 12-month run rate for those contracts. - Rampraveen Swaminathan, CEO
Q: What is the strategy for reducing the white space of 1.5 million square feet in warehousing?
A: We aim to reduce white space to around 700,000 to 800,000 square feet by Q1 next year, based on current contracts. We plan for a 3.5% white space as a buffer, but currently, we are running at about twice that. - Rampraveen Swaminathan, CEO
Q: With the current slowdown in the Express business, what is the timeline for achieving profitability, and what measures are being taken?
A: We need an additional 6,000 to 7,000 tons per month to reach EBITDA breakeven. We are focusing on expanding our offerings, improving sales efficiency, and addressing operational issues. We expect to be a couple of quarters away from breakeven. - Rampraveen Swaminathan, CEO
Q: How has January's performance been compared to Q3, especially in the Express business?
A: January has shown a sequential positive move, although it hasn't been a blockbuster month. We are seeing a crawl in volume growth, and pricing remains tight. - Rampraveen Swaminathan, CEO
Q: What additional margins can be expected from a revenue increase of INR30 crores to INR40 crores in the Express segment?
A: With a contribution margin of 26%-27%, an additional INR30 crores to INR40 crores in revenue could yield INR10 crores to INR11 crores in margin. Increased utilization could add another INR2 crores to INR3 crores. - Rampraveen Swaminathan, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
