Mahindra Logistics posts broad-based Q1 growth as Express losses narrow

Q1FY27 Financial Performance

Mahindra Logistics delivered healthy execution in 1QFY27, supported by broad-based growth across 3PL, freight forwarding, mobility and Express businesses. Consolidated revenue rose 23% year on year to Rs 2,003 crore, 8% above Motilal Oswal Financial Services Ltd. (MOFSL)'s estimate.

EBITDA increased 51% year on year to Rs 115.4 crore, 7% above estimate. EBITDA margin was in line with the estimate at 5.8%, up 110 basis points year on year but down 50 basis points quarter on quarter. Adjusted profit was Rs 25.4 crore, compared with an adjusted net loss of Rs 10.8 crore in 1QFY26.

Business Segment Performance

Supply Chain Management revenue grew 23% year on year to Rs 1,890 crore and generated EBIT of about Rs 37.3 crore. Consolidated revenue growth was driven by 26% growth in Contract Logistics, approximately 57% growth in Express and 39% growth in mobility.

Mahindra Logistics recorded healthy gross-margin performance across businesses. Improvement was particularly strong in Last Mile, Cross-Border and B2B Express, while Contract Logistics saw a marginal improvement. Express delivered its highest consecutive quarter of positive gross margin at Rs 9.2 crore, although the business remained EBITDA loss-making.

Management Priorities and Operating Progress

• Contract Logistics secured multiple client wins across diverse segments, supporting scale-up.
• The Mahindra Group accounts for around 60% of total business. Management does not intend to deliberately reduce this exposure and aims to grow both Mahindra and non-Mahindra business.
• Warehousing white-space reduction remains on track. From an initial 1.6 million square feet, the company reduced around 0.9 million square feet in FY26 and targets a 95% reduction by September 2026.

Last Mile Delivery and Mobility

Last Mile Delivery

Last Mile Delivery revenue was about Rs 71.2 crore, down 16% year on year. However, gross profit rose 58% year on year to Rs 6.3 crore because of margin expansion.

Management cited industry-wide pricing pressure and said it had exited low-margin activities. All pruning actions were completed in FY26. The company expects recovery through a leaner cost base and improved operating efficiency, while prioritising profitable growth over volume.

Enterprise Mobility

Enterprise Mobility revenue was Rs 115.5 crore, up 42% year on year, with EBIT of Rs 1.8 crore. The B2C mobility business was rebranded as Alyte. Growth was supported by B2B customer additions, better B2C utilisation and the launch of Alyte Prive, a premium airport-to-city and intercity service. Management also remains focused on scaling airport taxis at Noida International Airport.

Earnings Estimates and Outlook

MOFSL maintained its FY27E and FY28E EBITDA estimates but reduced FY27E PAT by 12% to Rs 116.3 crore and FY28E PAT by 5% to Rs 184.4 crore.

Valuation and Investment View

MOFSL reiterated its Neutral recommendation and revised its target price to Rs 400, based on 20 times FY28E EPS.

Key Operating Concerns

• Express continues to report EBITDA losses, despite delivering its highest consecutive quarter of positive gross margin.
• Last Mile Delivery remains exposed to pricing pressure, although the company has exited low-margin activities.
• Profitability is expected to be supported by margin recovery, cost control, yield improvement and the reduction of warehousing white space.