Mahindra Logistics Ltd (MAHLOG) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Mahindra Logistics Limited Q2 FY '27 earnings conference call. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mandar Chavan from SGA. Thank you, and over to you, sir.
Mandar Chavan (SGA): Thank you, Iqra. Good evening, everyone, and thank you for joining us for Mahindra Logistics Limited Q2 and H1 FY '27 earnings conference call. We are pleased to have with us today Mr. Hemant Sikka, our Managing Director and CEO; Ms. Isha Dalal, our CFO, along with the member of the senior management team. I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on the company's website and stock exchanges. We will begin the call with opening remarks from management followed by an open forum for question and answer. Before we begin, I would like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation. I would like to invite Mr. Sikka to share his remarks.
Hemant Sikka (Mahindra Logistics Ltd): Thank you, Mandar. Good afternoon, everyone, and thank you for joining us. Over the past year, we have been deliberate in reshaping Mahindra Logistics into a more efficient, disciplined, and profitable enterprise. We have sharpened our operating model, improved unit economics, addressed structural inefficiency, and embedded greater accountability across the organization.
Hemant Sikka (Mahindra Logistics Ltd): Today, the impact of these actions is clearly visible in our performance. The business is now moving from turn around to acceleration, from fixing the past to building the future. Our focus is increasingly on the quality of growth that we deliver, the depth of customer relationships we build, the length we go to, to satisfy our customers, and our ability to consistently convert growth into sustainable shareholder value. Q2 reflects a business that is growing with greater quality, discipline, and profitability. PAT has increased to rupees 26 crore, compared to a loss of 10 crore a year ago, and 25 crore in the previous quarter, while revenue grew 24% YoY. Our focus on profitable growth is also reflected in improving capital efficiency. ROCE increased to 12.9% in H1 of FY '27 from 1.7% in H1 of FY '26, demonstrating stronger capital productivity and our commitment to creating long-term stakeholder value. More importantly, these results demonstrate that we can grow faster while improving profitability and operating discipline. This is exactly the outcome we have been working towards: profitable growth, stronger cash generation, and sustainable value creation. Three themes have defined this quarter. First of all, our express business, Rivigo, has crossed an important milestone. MSPL Rivigo turned EBITDA positive during the quarter and for H1 FY '27 as a whole, also. Demonstrating that the business has reached a critical inflection point and is beginning to realize the benefits of scale, operating leverage, and disciplined execution. Second, contract logistics continue to strengthen its leadership position. Growth was driven by new customer additions, deeper wallet share with existing customers, and a relentless focus on profitability and execution. Whitespace reduction, you would recall, has been an issue in the past few quarters, and we had committed in quarter 1 of last year that we would reduce our whitespace, that time of 1.6 million, by 95%. I'm happy to share that this has progressed in line with our commitments. We have achieved our target reduction that we had committed in quarter 1 of last year. Having solved the whitespace problem, we will not be calling this out from now onwards, as it is business as usual now. Third, operational excellence is increasingly becoming a competitive differentiator. Better service levels, higher asset productivity, and consistently positive customer feedback reflects the execution discipline we have built across the organization, and provide a strong foundation for sustained growth. Let me now take you through the business updates. Let me start with MSPL, which is our B2B express logistics business. MSPL or Rivigo has turned a corner. The business delivered its first ever EBITDA positive quarter and achieved EBITDA positivity for H1 FY '27, making a significant milestone in our transformation journey. Actually, this momentum is visible in the numbers. Q2 revenue grew 69% YoY, while EBITDA improved from a loss of 9.1 crores in quarter 1 of last year to a profit of 2.3 crores in quarter 2 of this year. Higher volumes, improved yields, and disciplined execution are translating into stronger financial performance. Since June of this year, Ankur Bansal has taken over as the CEO of MSPL. Under his passionate and hands-on leadership, the business has accentuated a relentless focus on improving business economics, execution discipline, and profitability. The progress is not visible in both operating and financial performance. Very happy to state that the leadership team of MSPL has aligned to these targets and these challenges. The mandate ahead is clear for MSPL team, to convert EBITDA momentum into achieving PAT positivity. With improving operating leverage and growing business momentum, we are increasingly confident about the path ahead and working excitedly to grow this business. Let me come to other business, contract logistics, which continues to compound strongly. Quarter 2 revenue grew 28% YoY, while gross margins grew 20% YoY, demonstrating that the growth and profitability are improving together. Whitespace reduction, as I called out, has been successfully executed, with vacant space now reduced to just 5% of the June 2024
Hemant Sikka (Mahindra Logistics Ltd): levels in line with our commitment. Commerce and Quick Commerce businesses continue to be important growth engines benefiting from favorable market tailwinds and our strong execution capabilities. We continue to win the right businesses. New customer editions across sectors reflect the strength of our solutions, service delivery, service delivery excellence and trusted customer relationships. In our mobility business, we continued to deliver profitable growth. Q2 revenue grew 33% YoY with gross margin showing 19% YoY growth, underscoring the strength of our operating model. Our focus remains on quality over volume, expanding our customer base while ensuring that growth translates into sustainable profitability. In our last mile delivery business LMD as we call it, the focus remains firmly on profitable growth. Revenue stood at ₹68 crore in quarter two of FY27 as we continue to prioritize business quality and margins over low value volume. The benefits are clearly visible in our profitability metrics for this business. Gross margins improved 18.8% YoY supported by a superior customer mix, pricing discipline, excellent execution and a very tight control on all the costs. This excellent performance has given us the confidence that our last mile business is now ready to pivot towards growth from our earlier articulated a no-loss strategy. You would recollect that in the previous communication I had said that our target for our strategy for LMD business is, while we continue to grow the business, but the main focus is no-loss strategy. We are now pivoting this business from a no-loss strategy to a pivot towards growth and we are feeling more excited and more confident about this business. In our freight forwarding business, we are rebuilding momentum. Revenue for quarter two FY27 stood at ₹50.6 crores, growing 12% QoQ. Our strengthened leadership team is driving sharper market engagement, broader commercial coverage and a healthier pipeline, positioning the business for stronger growth while maintaining high service levels and operational discipline. So to conclude, quarter two FY27 was a quarter of execution and outcomes. We delivered a sharp improvement in profitability. MSPL, Rivigo achieved EBITDA positivity, white space in contract logistics reduced to our committed and targeted levels by September of this year and each of our businesses remained firmly focused on profitable growth. Most importantly, these improvements are broad-based and structural. The turnaround journey we started is now evolving into a sustainable growth story. Importantly, the benefits are now visible across multiple businesses giving us confidence in the durability of this performance. Looking ahead, our path is clear. Our focus remains on three priorities: drive consistent growth in revenue, profitability and cash generation; continuously raise the bar on operational excellence and productivity; and deepen our customer relationship by delivering differentiated value and superior service quality. Our vision of becoming India's number one integrated logistics solution provider remains firmly intact. We have strengthened our foundations, built the right team and created strong momentum across the business. We are confident that this trends position us well to deliver sustainable growth, stronger earnings and long-term value creation in the quarters ahead. With that, I will hand over to Isha, our CFO, who will take you through the financial performance in greater detail. Over to you, Isha.
Isha Dalal (Mahindra Logistics Ltd): Thank you, Hemant. Let me now give a brief on the consolidated financial performance for quarter two F27. Our revenue for the quarter has increased by 24% on a year-on-year basis to ₹2,095 crores largely driven by momentum in the M&M business as well as momentum in MESPL. Consolidated gross margins stands at 10.1% in Q2 F27 sequentially up by 40 bps versus Q1 F27, reflecting our ongoing commitment to improving operating performance. Year-on-year, our gross margin remains flat in percentage terms that is at 10.1% and has improved by ₹41 crores in line with revenue growth. EBITDA for the quarter stands at ₹124 crore, up from ₹85 crores in Q2 F26. EBITDA margin has grown from 5% to 5.9%, which is an increase of 90 bps year-on-year. Our discipline on overheads cost and focus on judicious spending is reflected in this year-on-year operating leverage.
Isha Dalal (Mahindra Logistics Ltd): This is also visible in our adjusted EBITDA, which is EBITDA after removing the accounting impact of Ind AS 116, which has increased by 110 bps year-on-year from 1.8% to 2.9% in Q2 F '27. We continue to have low leverage. Our standalone balance sheet has been debt-free since September 2025. At a consolidated level, we have Rs. 55 crores of debt, largely comprising of loans for vehicles purchased as part of our asset-light strategy. Overall, we have a consolidated cash balance of Rs. 363 crores and therefore net cash of Rs. 308 crore. Hemant spoke about Q2 F '27 being a quarter of both execution and outcomes. The outcome of improving profitability, our asset-light model and working capital discipline have together culminated in a steadily improving return profile. We generated free cash flow of Rs. 52 crores during H1 F '27 versus a free cash flow of minus Rs. 210 crores in H1 F '26. Our ROCE for H1 stands at 12.9% versus 1.7% during the same period last year. Our ROE has improved from minus 5.3 to positive 8.7% in H1 F '27. Before I move on to segment performance, there is one callout that I'd like to make regarding the standalone financials. We have declared a dividend of Rs. 15 crores in one of our wholly owned subsidiaries, which is reflected in the other income line in the MLL standalone financials. This is a one-time dividend only and gets knocked off in the consolidated performance of MLL. Moving on to segment performance. Our contract logistics revenue for Q2 F '27 is at Rs. 1,688 crores as compared to Rs. 1,317 crores in Q2 F '26, which is up by 28%. EBITDA has grown in line with revenue to Rs. 115 crores as compared to Rs. 89 crores in Q2 F '26. In the last-mile delivery business, our revenue for Q2 is Rs. 68 crores, compared to Rs. 88 crores in Q2 F '26, down by 23% as part of our conscious choice to move towards a more profitable portfolio. EBITDA has improved from Rs. 40 lakhs in Q1 F '26 -- Q2 F '26 to Rs. 1.6 crores in Q2 F '27. You may all recall that our strategic portfolio recalibration was largely done during Q3 of F '26. Hence, we expect that as we enter the quarter 3 of this financial year, we will once again witness a year-on-year growth in the last-mile delivery business. Our freight forwarding revenue has grown by 12% quarter-on-quarter from Rs. 45 crores to Rs. 51 crores in Q2. Year-on-year, this business has declined by 44%, reflecting the impact of external disruptions and customer attrition during the recent leadership transition period. As Hemant already mentioned, the new team is engaged in building a strong pipeline. Despite the top line decline, EBITDA is at Rs. 1.7 crores in Q2 F '27, which is only a decline of Rs. 50 lakhs year-on-year. This is a consequence of operating discipline and margin focus even in the adverse environment. We have spoken in detail about the express business, which has grown by 69% year-on-year to a revenue of Rs. 169 crores in Q2 F '27. We are pleased to declare an EBITDA positive quarter for this business for the first time since acquisition. EBITDA for this quarter is Rs. 2.3 crores compared to minus Rs. 9 crores in Q2 F '26. You will all remember that we achieved cross-margin breakeven for this business in the quarter 2 of last year and have now achieved this significant milestone as the business accelerates its turnaround journey. Mobility revenue was Rs. 119 crores as compared to Rs. 90 crores in Q2 F '26, up by 33%. EBITDA is also up at Rs. 3.4 crores compared to Rs. 2.1 crores in Q2 last year. This brings me to the end of the commentary on segment performance. Let me now open the floor for question and answers.
Moderator: Thank you. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, you are requested to restrict your questions to two per participant.
Moderator: We'll wait for a moment while the question queue assembles. The first question is from the line of Jinesh Joshi from Prabhudas Lilladher Capital. Please go ahead.
Jinesh Joshi (Prabhudas Lilladher Capital): Yeah. Thanks for the opportunity and congratulations on good set of numbers. Sir, my first question is on our B2B Express business, which has achieved an EBITDA break-even in this quarter. And I believe that the network optimization and the repricing exercise is more or less over. And given the business is now on path to profitability, how should we think about the steady-state EBITDA margin in the business given one of your peers is operating at about 10, 12% mar- margin? I'm not asking about an explicit guidance, but if you can if you can just maybe highlight how the margins will evolve from here on, given the fact that you may also choose to invest in in network expansion. So, some color on that will definitely help.
Hemant Sikka (Mahindra Logistics Ltd): So thank you, Jinesh. So let me just broadly share without being in any of forward-looking guidance. See, as Isha said, we had gross margin positive quarter few quarters back and this quarter we have done the EBITDA positive. In the last quarter, we had said we are very close to EBITDA positive number. Now I can tell you that from here, we are our next milestone is obviously to be PAT positive. I think we have all the elements and actions in place to achieve that number. We have to execute for next few months and quarter and we should be able to achieve a PAT positive. So, we have a full visibility and full control on achieving that number. On the side, we are kicking off a very ambitious project on our new tech platform development for MSPL and MLL as a whole. I think that is a very strong ingredient and an input for us to scale this business up. As you know, for the last 3 years, while the business was making considerable losses, we were running the business in terms of our tech stack as kind of lights-on mode. But now having achieved this milestone and a clear line of sight to PAT positivity, we now want to start investing back into the business. Overall, at a strategic level, we think of MSPL as a big story that will play out for us in the next few years. It is it will improve the performance every quarter, but this is not a thing which will play out fully in next 6 months or 1 year. This is a this is a kind of a I would say a decade story. All the people who are our competition have built this business over several years. We we have taken now 3 years to reach this milestone. We will continue to invest into this business and we believe that this business will be a very healthy business and will be a very strong differentiator for MLL and also for our customers, because we want to be a full logistics player, while we will continue to serve our FTL customers and all our warehousing customers. It's very important that we give them a full line of services that includes our PTL network business with Rivigo and a freight forwarding business. So this is where we stand. I I would like you to think about this business as a multi-year growth story and not like achieving some milestone, which would happen in next 2 3 4 quarters. This is a business that will require huge amount of hard work, huge amount of passion and commitment from our leadership team and also investments. As we achieve PAT profit, we will continue to put money back into the business and make sure that our network grows. Right now, we are not serving all the pin codes that are customer our competition is serving. We need to grow this business, go to areas where we currently don't serve. So, please Jinesh and others, think about this business that this is a growth driver for MLL. And it will require few more years of work. And we clearly understand it's a very profitable business. Every network business, if run well, is very profitable. Think of this like an airline business. An a- an airline well run is highly profitable, an airline poorly run is not profitable at all. Similarly, this this business is same. A well-networked business which is well run is very profitable, otherwise it can really sink the ship. So, we want to run this business in a very mature and in a very competent way while we will build our team
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