Q3 FY21 Result and Concall Update - Mahindra Logistics - YES Securities

(Rating: SELL, TP: Rs 391, Downside 16%)

- View - Q3 has been a decent quarter for both Auto and Non-Auto businesses. The cost cutting measures have also helped in improving margin performance. Going forward, we believe MLL's growth would be driven by growth in End use segments and also how the new initiatives like Flex Warehousing solutions and EDEL (last mile delivery) play out. We raise our estimates to factor in the improved outlook and also roll forward our estimates to FY23 and revise target price to Rs.391. While the outlook has improved and several new initiatives are being undertaken, we believe the positives are priced in at current levels (trades at 36x FY23 EPS). We would await better entry point and retain SELL.

- Quarter summary - Mahindra logistics reported topline of Rs10.5 bn (+15% yoy). While Supply Chain segment grew ~24% yoy, Enterprise Mobility division continued to struggle with revenue declining ~60% yoy. The performance in the EM segment was likely hit as large part of clients' employees continued to work from home. The Company reported Operating Profit of Rs530 mn, (+25% yoy). Margins came at 5.1% in Q3 FY21 vs 4.7% in Q3 FY20. APAT grew by 17.5% to Rs.183 mn during Q3 FY21

- Auto Segment - Strong turnaround was witnessed in the Auto segment. Tractor demand was driven from rural and semi-urban cities. E-comm: Continue to see strong growth with focus on the digital side. Online shopping continued to be the preferred mode driven by safety issues due to COVID. The company believes that the demand will continue to be strong. Consumer/FMCG/Pharma/Durables and Apparels demand have reached to Pre-COVID levels and segment like apparels benefited maximum from festive season. The customers of these segments are redesigning their business as they are moving on digital mode and B2C models.

Shares of Mahindra Logistics Ltd was last trading in BSE at Rs.469 as compared to the previous close of Rs. 482.6. The total number of shares traded during the day was 743 in over 114 trades.

The stock hit an intraday high of Rs. 485.25 and intraday low of 469. The net turnover during the day was Rs. 353712.

Source : Equity Bulls

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