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Mahindra Logistics hosted a conference call on
Apr 23, 2024. In the conference call the company was represented by Rampraveen
Swaminathan, MD & CEO.
Key takeaways of the call
Q4FY24 was marked by an
increasing volume recovery and growth as the company saw positive momentum
across its businesses, with strong growth in 3PL and Mobility segments.
PAT of core business (MLL+
Lord+mobility) in Q4FY24 was impacted by onetime expenses of RS 10 crore
towards provision for doubtful receivables and RS 2 crore of IT charges.
Excluding the onetime charges, the PAT of core business in Q4FY24 was up 4%YoY.
B2B express business of the company
has started seeing the benefits of cost optimization, with improving operating
margins & EBITDA. Expect
EBITDA break even by end of Q2FY25 though re required 30% volume growth for
EBITDA break even is not there. The
company is expected to improve profitability with driving the right volume
growth (rather than the overall volume growth) and cost optimisation. Not seeing lot of volume growth in H1FY25 in
express service business but getting into H2 there will be volume growth as
there will be festival boost.
B2B Express Business: Rivigo business
focus is on improving service levels and cost recovery. In the last four moths
the focus is on getting the cost structure right and the focus will continue
for next six months. Revenue of Express biz in Q4FY24 was up 26%YoY and the
EBITDA loss has come down to Rs 15 crore (from Rs 22 crore in Q3FY24). The PAT
loss reduced by 26% from Q3FY24 levels.
On cost recovery of express business the company is focused on LineHaul optimization
with LineHaul utilization stand increased to about 80-85% from about 65-70%.
Still there is more headroom for growth. Similarly the company is restructuring
its pick-up and delivery operations to bring down the pickup & delivery cost
(18% of overall cost). Overall the company sees room for improvement to the
tune of further about 15-20%.
Rivigo business handled a volume of about 75000
tonnes. There is a 3.5% growth in daily run rates. Remain focused on high
service levels.
Completion of the 2nd tranche of
investment in Zip Zap Logistics will help the company further consolidate and
provide an expanded range of services for last mile delivery and micro-fulfillment.
The mobility segment is now
profitable and continuing to expand earnings. The air travel is back to
pre-covid levels and corporate employees are gradually moving to work from
office. Office leasing is expected to grow at 20% CAGR auguring well for strong
demand. Airport services are moving towards multiple
vendors, priority to EVs.
Target Rs 10,000 crore of
consolidated revenue over the next three years with all three broader business verticals
i.e. contract logistics, network services business and mobility driving growth.
Contract Logistics business of the company is
expected to register a growth of 15-17% (to about Rs 6000 crore) over next 3
years. Expect warehousing space of about 7.5 lakh square feet (sft) and
6.2 lakh sft to go line in Q2FY25 and Q4FY25 respectively. The driver for growth will be higher Demand
for Integrated Solutions instead of piece-meal logistics services and lower
level of 3PL logistics penetration in the country at 5% (vs. 10% global level).
The Network Services business (Freight
Forwarding, B2B Express and LastMile Delivery businesses) are expected to reach
a revenue size of about Rs 750-800 crore each (3 verticals separately). The Mobility business to reach a revenue of
Rs 1000 crore from current about Rs 328 crore. However
there is a risk to under-achieve the revenue target of Rs 1000 crore by
mobility business due to stress in the
business.
Remain focused on driving the
value of logistics solutions by integrating services across India, leveraging
our network, technology, and human capital.
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