Mahindra Logistics Seen Targeting Rs 504: Prabhudas Lilladher Recommendation
Mahindra Logistics Reports Strong 4QFY26 Performance
Mahindra Logistics (MAHLOG IN) has reported a better-than-expected performance in the fourth quarter of fiscal year 2026 (4QFY26). The company's revenues increased by 14.1% year-over-year (YoY) to Rs17,914 million, surpassing the projected estimate of Rs17,841 million. This significant growth was driven by a strong operating performance.
The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin stood at 6.3%, exceeding the projected estimate of 5.3%. Furthermore, the company's profit after tax (PAT) surpassed the Rs200 million mark for the first time since 4QFY19, with a significant increase of Rs124 million over the projected estimate of Rs76 million.
| Financial Performance | Actual | Projected Estimate | Change |
|---|---|---|---|
| Revenues (Rs million) | 17,914 | 17,841 | 0.4% |
| EBITDA Margin | 6.3% | 5.3% | 1.0% |
| PAT (Rs million) | 200+ | 76 | 163.2% |
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
The company's turnaround is attributed to the transformation in its B2B express division, which is expected to drive growth. With steps taken to optimize linehaul costs, improve lane utilization levels, and expand network coverage, the B2B express business is expected to report a revenue compound annual growth rate (CAGR) of 17.0% over the next two years. The company also expects the contract logistics business to grow with the entry into new categories, while the white space reduction will aid margins.
Consequently, the company is expected to report a revenue CAGR of 13.0% over the next two years, with an EBITDA margin of 6.4% and 6.6% in FY27E and FY28E, respectively.
Valuation and Recommendation
The company's valuation methodology has been changed to EV/EBITDA, considering the recent rental disclosures. The stock is valued at 14x pre-IND AS EBITDA of FY28E, resulting in a target price of Rs504. This valuation also implies a price-to-earnings (PE) ratio of 28x on pre-IND AS earnings per share (EPS) of Rs18.1 for FY28E. As a result, the research firm retains a BUY recommendation.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
Investors should consider Mahindra Logistics for its turnaround potential driven by B2B express division growth.
More in Market
Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Indian Stocks to Watch: BHEL, Agarwal Industrial, JBM Auto, Rajesh Exports, Indian Energy Exchange, Lenskart Solutions in Market Focus on June 4.
