Let’s explore Mahindra Logistics Ltd. fundamentally, understand its business model and industry, and determine whether it’s a good investment fit for you.
Mahindra Logistics Ltd.
Mahindra Logistics Ltd. is an integrated logistics and mobility solutions provider. It is a solutions provider to clients who seek supply chain expertise to several verticals like automotive, engineering, consumer goods, pharmaceuticals, telecommunications, commodities, and e-commerce.
The company also operates a large segment of its business in the warehousing, fulfilment, and VAS services. They currently control more than 500 locations, 15,000 trucks, and 1500 business associates around India. Mahindra Logistics Ltd. also provides last-mile logistics support to major e-commerce companies.
Currently, more than 95% of its revenues come from transportation and warehousing in India and abroad.
You may also like: Titan Company Ltd.
Is the logistics industry a good sector to invest in?
The Indian logistics sector is expected to grow at a CAGR of 10-12% over the next few years, driven by factors such as increasing urbanisation, rising e-commerce penetration, and government initiatives that promote the development of infrastructure like roads and railways. Currently, the logistics industry is also undergoing the adoption of AI and machine learning, which is being used to optimise routes, predict demand, and automate tasks. Experts estimate that AI-powered route optimization software can help logistics companies save up to 30% on fuel costs.
We encourage you to do your own research, but the overall opinion about investing in the logistics sector remains largely positive.
Who are its competitors in the logistics sector?
Here are some of MAHLOG’s competitors:
- Container Corporation of India
- Delhivery Ltd
- Blue Dart Express Ltd.
- TVS Supply Chain Solutions Ltd.
- Transport Corporation of India
History of Mahindra Logistics Ltd.
Mahindra Logistics, a subsidiary of the Mahindra Group, is a leading integrated logistics provider in India with a global presence. The company was established in 2007 and has since grown into a big player in the industry.
Mahindra Logistics’ journey began with the logistics division of Mahindra & Mahindra, which was formed in 1994. In 2007, this division was separated and formed into a separate company, Mahindra Logistics Limited, with a vision to become a leading integrated logistics provider. The company’s initial focus was on providing supply chain management solutions to the automotive sector, a core business of the Mahindra Group.
Over the years, Mahindra Logistics has expanded its reach to become a pan-India player. It has also received numerous awards, including the ‘Supply Chain Management Company of the Year‘ award from the Logix India Awards and the ‘Excellence in Logistics‘ award from the Confederation of Indian Industry.
Also Read: Varun Beverages Ltd.
Investing in MAHLOG
- The company is investing in technology to improve and streamline its supply chains, and has recently developed LogiOne, which is an integrated digital platform
- It is a subsidiary of one of the largest business groups in the country, Mahindra & Mahindra
- The company has 17.5 million sq. ft. of warehousing space and a growing cross-border supply chain business
- The company targets to be a Rs. 10,000 crore logistics service provider by FY 2026
- The stock seems to be overpriced according to its books, currently trading at more than 5 times the book value
- The company might not be able to service its debts, since it has a low interest coverage ratio
- It has also delivered poor sales growth, clocking a little less than 8.5% over the past 5 years
- Return on equity also remains low at 4.24% over the last 3 years
Shareholding pattern of Mahindra Logistics Ltd.
Here’s the shareholding pattern of MAHLOG:
- Promoters: 58.04%
- Foreign Institutional Investors (FIIs): 12.08%
- Domestic Institutional Investors (DIIs): 14.60%
- Public: 15.27%
Foreign institutions have decreased their stake in the company since June last year. Numbers have come down from 20% in June to 12% now. Retail investors, on the other hand, have increasingly bought more of Mahindra Logistics, and now own more than 15% of the company, which is up from 8.3% from June last year.
Peer multiple comparison
|Mahindra Logistics Ltd.
|Container Corporation of India Ltd.
|Blue Dart Express Ltd.
Over the last five years, revenue has grown at 1.5% less than the industry average, which has also led to a decreasing market share from 7.91% to 5.92% during the same time period. The company’s earnings have also been coming down 16% every year, while the industry average remains very high at 43%.
So, that’s a brief overview of everything you need to know about Mahindra Logistics Ltd. before investing. This information is by no means, however, exhaustive, and we encourage you to do your own research before investing.
Need help with investing in the stock market? Learn to trade with hundreds of other like-minded traders on StockGro – the social trading platform. Learn how to invest using virtual cash, practice, and get your trading game perfect before real money gets involved. Download the StockGro app now!