Mahindra Logistics working toward ₹10,000-cr revenue by FY26

Mahindra Logistics is working to get to a revenue of ₹10,000 crore in FY26 by which time it expects the B2B express business, that it acquired in 2022, to have stabilised, reduced cashburn and contributing in a meaningful way to the company, MD & CEO Rampraveen Swaminathan told businessline.

The Mahindra group company ended FY24 with a loss of ₹54.7 crore and revenue of ₹5,506 crore. The bottomline was dragged down by the B2B express business on costs associated with integration, network buildouts and some other expenses.

Swaminathan said that there were some issues in integration that affected results in three quarters and “we are running a couple of quarters behind what we expect it to be at.”

The express business is expected to be positive at the EBITDA level at the end of the current fiscal year, Swaminathan said. He pointed out that the core business of third-party logistics services, which accounts for 75 per cent of the business had done well driven by growth in automotive, engineering and consumer sectors.

“The rest of the business is in pretty good shape,” he said.

While 3PL will remain at the core of its business strategy it expects the revenue share from that to go down to 55-60 per cent over the next 2-3 years as other segments scale up. Post Covid, “we’ve obviously rebuilt or repositioned the company with more focus and distribution, more focus on building a world-class warehousing network.”

Last mile delivery and freight forwarding, the network services, will be around 30-35 per cent of the business and the remaining will be mobility. The network services business, which it is building up, will play a significant role in its financials as it is more profitable and has a higher earnings multiple compared to 3PL which is low margin. So while 3PL will have a higher share of revenue it will have a lower share of the earnings.

The company manages around 20 million square feet of warehousing space and contributes around a fourth to the contract logistics revenue. Another 7 million square feet is under construction in places such as Kolkata, Guwahati and Agartala. Around Diwali this year it will be ready with 1 msf of warehouse space. These are multi-client facilities and built-to-suit according to specifications and requirements of the company’s customers.

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