Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mahindra Logistics Ltd (BOM:540768, Financial) reported a 14% year-on-year increase in revenue for Q4 FY24, reaching INR1,451 crore.
- The company's third-party logistics business had a strong order intake with an annual contract value of over INR100 crore.
- The mobility segment showed strong growth in B2C, driven by increased travel and seasonal vacations.
- The launch of the LOGIONE technology platform continues to make progress, enhancing operational efficiencies.
- The company achieved over 27 million green kilometers across its electric vehicle fleet and 3.6 million square feet of renewable power warehousing.
Negative Points
- The farm segment continues to be sluggish with weakening lead indicators and a soft short-term outlook.
- E-commerce has been a challenging end market for the last three quarters, despite a recent uptick in order intake.
- The gross margin on a fully consolidated basis stood at 9.4% in Q4 FY24, down from 10.2% in Q4 FY23.
- The company reported a consolidated PAT loss of INR12.8 crore for Q4 FY24, although this was an improvement from the previous quarter.
- The Express business continues to face challenges, with a PAT loss of INR24.9 crore for the quarter, despite some improvement.
Q & A Highlights
Highlights of Mahindra Logistics Ltd (BOM:540768) Q4 FY24 Earnings Call
Q: Can you explain the significant increase in other expenses on a stand-alone basis?
A: Rampraveen Swaminathan, CEO: The increase is largely due to one-time charges, including technology costs and infrastructure costs. These are not recurring and should stabilize moving forward.
Q: What has been the volume growth in the Rivigo business, and how does it impact profitability?
A: Rampraveen Swaminathan, CEO: Volume growth was around 3.5% quarter-on-quarter. The focus has been on improving utilization and cost optimization, which has led to margin improvements despite muted revenue growth.
Q: How confident are you about achieving EBITDA positivity in the Express business by Q2 FY25?
A: Rampraveen Swaminathan, CEO: We are confident due to our focus on cost optimization and productivity improvements. While volume growth may be muted in the first half, we expect significant improvements in the second half.
Q: What are the key drivers for the improvement in the e-commerce segment?
A: Rampraveen Swaminathan, CEO: The improvement is driven by focusing on specific niches like grocery, account expansion, and adding new services. These strategies have helped us navigate the challenging market conditions.
Q: Can you elaborate on the cost optimization measures in the Express business?
A: Rampraveen Swaminathan, CEO: Key measures include improving vehicle utilization, restructuring pickup and delivery operations, and optimizing site operations. These efforts are expected to yield a 15-17% improvement in costs.
Q: What is the outlook for the contract logistics business, given the lower gross margin growth?
A: Rampraveen Swaminathan, CEO: The lower margin growth is due to a mix of increased transportation services and the start-up costs of new warehousing sites. We expect these margins to stabilize and improve as new sites become fully operational.
Q: What are the growth expectations for the last-mile delivery business?
A: Rampraveen Swaminathan, CEO: We expect high-teens to early 20% growth in the last-mile delivery business, driven by increased purchasing power, co-locating operations, and improving workforce productivity.
Q: How do you plan to achieve the INR10,000 crore revenue target by FY26?
A: Rampraveen Swaminathan, CEO: The growth will be driven by a 15-17% CAGR in the contract logistics business, scaling up network services, and leveraging synergies across our portfolio.
Q: What is the impact of fuel cost fluctuations on your business?
A: Rampraveen Swaminathan, CEO: Most of our contracts are fuel-indexed, allowing us to pass on cost increases to customers. We also benefit from any reductions in fuel prices.
Q: What are the sustainable gross and EBITDA margins for the Express business post-optimization?
A: Rampraveen Swaminathan, CEO: We aim for a 4% PAT level in the long term. The focus is on both cost optimization and volume growth to achieve this target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
