Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Research

| More

Mahindra Logistics - Resilient in challenging times - ICICI Securities

Posted On: 2020-08-03 08:45:00


Mahindra logistics' (MLL) Q1FY21 performance was a tale of two halves. While H1 witnessed cross industry disruption, MLL bounced back strongly in H2 of Q1 driven by quicker normalisation of the warehousing pie, cross border logistics opportunities delivering growth in freight-forwarding segment and some interesting customer wins. Maintaining gross margins despite higher warehousing mix is a representation of i) higher fixed overheads leading to a squeeze in transportation margins and ii) lower utilisations and higher Covid-19 related costs. Going forward, the biggest margin tailwind will be utilisation, tempered by normalisation of warehousing mix. MLL highlighted the strategic vision of reaching Rs100bn of revenues by FY26, implying FY20-26 CAGR of 19%. Maintain HOLD with a revised target price of Rs294/share (Rs275/share earlier).

- Where are the opportunities? Auto and farm will see a delayed recovery, and is trailing historical demand patterns. Rural is seeing faster recovery and so are tier 2/3 cities. Supply-side constraints of auto should be debottlenecked in coming months. Farm sector is currently being helped by monsoon, credit and rural demand as well as government initiatives. Manufacturing was returning to normalcy by June, '20. E-commerce has seen a strong tailwind and last mile distribution and express logistics along with sort centres, fulfillment centres will see revived demand. Interest for omni-channel supply chain solutions is on the upmove. PPE products have seen significant increase in distribution, and has been capitalised through MLL's freight-forwarding subsidiary. Digital channels redesigning will lead to higher opportunities, as per management. Interestingly, opening remark didn't have much mention on enterprise mobility, a contrast to elaborate plans in the annual report.

- Customer acquisition was strong in second half of Q1FY21. Order acquisition in H2Q1FY21 mirrored past years. MLL secured distribution and inbound transportation contract with a leading steel company as well as country's largest decorative and automotive glass manufacturer. MLL has also won fulfillment and logistics services, grocery and heavy bulk distribution contracts in H2Q1FY21. It continues to expand both existing and new customers in FMCG and personal care. Expanding on solutions is the key lever for MLL. Strong growth is seen in flexible short-term solutions (processing facility for managing variable demand) and Q2/Q3 will add several such centres. Also, MLL wants to expand on cross border solution base. Interesting to note, freight-forwarding revenues have increased YoY in Q1FY21.

- Financial highlights. By June, '20 revenues reached ~70% of pre-Covid levels. Margins were helped by increasing warehousing in the mix, tempered by lower utilisation, Covid-costs and lower margins in transportation. Net cash reached Rs1.88bn by Q1FY21-end mainly through ~Rs1bn of release in working capital.

- New launches suggest a strong pipeline. Several customers start accessing service of MLL including one of the largest independent engine manufacturers wherein MLL will help in BS-VI engine distribution and BMI operations. Services have also commenced for inbound and outbound solution for international elevator OEM and fuel systems manufacture in western India. MLL has launched several goods transportation contract in Q1FY21. The company also continues to expand Build to Suit multiuser facilities; three of them were delayed but should be launched by Q2/Q3 of FY21& will add 1mn sq ft of area which has been largely leased out.

Shares of Mahindra Logistics Ltd was last trading in BSE at Rs.300.7 as compared to the previous close of Rs. 297.75. The total number of shares traded during the day was 2116 in over 187 trades.

The stock hit an intraday high of Rs. 309.8 and intraday low of 295. The net turnover during the day was Rs. 638949.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Auto

Mutual Fund Review - September, 2020 - ICICI Securities

UTI AMC announces IPO date - Angel Broking

Asian Paints - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Britannia Industries - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Hexaware Technologies (Not Rated): Hexaware accepts 475/share as final delisting price - ICICI Securities

CAMS IPO - Day 2 Subscription - Angel Boking

Chemcon Speciality Chemicals - IPO subscribed 12.62 times on second day - Angel Broking

General insurance - Fire, health remain growth drivers, rising Covid claims a concern - ICICI Securities

Supreme Industries - Perfect recipe for rerating; upgrade to BUY - ICICI Securities

Titan Company - Best positioned to gain from faster-than-expected recovery. Upgrade to ADD - ICICI Securities

Sector Update - Telecom - Sep 23, 2020 - ICICI Securities

Allcargo Logistics - Highlights of Blackstone deal - ICICI Securities

I-direct Instinct - Gokaldas Exports

Economy: RBI's trilemma: allows for INR strength - Kotak

HCL Technologies - Company Update - ICICI Securities

Chemcon Speciality Chemicals - IPO Review - ICICI Securities

Angel Broking - IPO Note - YES Securities

TCS - Announcement of its blockhchain based solutions on Microsoft Azure - Angel Broking

Amber Enterpirses acquire Sidwal - Angel Broking

Dixon Technologies - Buy - YES Securities

HCL Technologies acquisition of DWS Limited - Angel Broking

Allcargo Logistics CFO Resignation - Angel Broking

Upgrade to BUY on Gateway Distriparks - Strengthening the balance sheet - HDFC Securities

BUY on ITD Cementation - Execution pickup awaited - HDFC Securities

Allcargo Logistics - Trying to stich through an integrated offering - ICICI Securities

Polymer price tracker - Other polymer (ex-PVC) prices too firm up - ICICI Securities

Angel Broking - IPO Review - ICICI Securities

IPO Review - Computer Age Management Services - ICICI Securities

Company Update - EIH Ltd - ICICI Securities

Gladiator Stocks - Godrej Properties - ICICI Securities

Company Update - Dr Reddy's Laboratories - ICICI Securities

Gladiator Stocks: Pharma Thematic - ICICI Securities

Company Update - Housing & Urban Development - ICICI Securities

Covid Recovery Pulse - E-Way bill generation shows recovery signs with auto volumes flat - ICICI Securities

Quant Pick - UltraTech Cement - ICICI Securities

Lupin & Cipla - Positive News - Angel Broking

Sterling and Wilson Solar Ltd - 106.71 MW order win - Angel Broking

Dr. Reddy's Laboratories - Settles Revlimid litigation in US - ICICI Securities

Natco Pharma - Natco to launch first generic Revlimid - ICICI Securities

Solar Industries - Overseas and defence key to profitability - ICICI Securities

Federal Bank - Strengthening liability muscle; fees & charges revised upwards - ICICI Securities

HCL Technologies Mr. Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd

CAMS - IPO Note - YES SECURITIES

I-direct Instinct - Intellect Design Arena

P&G Health - Company Update - ICICI Securities

Relaxo Footwears - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Bata India - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Listing of Happiest Minds Technologies - Angel Broking

Dr. Reddy's Lab - Sep 17, 2020 - Angel Broking







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019