Mahindra Logistics share price: This logistics stock is down over 43% from recent high! Should you buy the dip?
Sharekhan in its recent report said that the company continues to focus on adding warehousing capacities, scaling up network services business, and eyeing capabilities-based acquisitions in the logistics space. Also, the five-year revenue target of Rs 10,000 crore remains intact along with net profit margin expansion.
It further added that the higher overhead absorption, increased integrated solutions revenue mix, and tapering of charges related to new warehouse additions as per new accounting standards are expected to drive faster growth in the company’s net earnings.
The brokerage firm remains optimistic about the long-term growth potential for and has retained the ‘Buy’ recommendation with a target price of Rs 630 per share, signaling an upside of over 35 per cent in the counter, from its previous close of Rs 466.55 on Tuesday.
believes that the order intake is running behind expectations. This is mainly on account of slower-than-expected growth in wide selection platforms which contribute 75 per cent of MLL’s e-commerce revenue, while category marketplaces are gaining share and delivering superior volumes. Given the slower-than-expected order intake, MLL has slowed down the addition of warehousing space, it said.
“We maintain ‘Add’ on MLL with a revised target price of Rs 465 (30x FY24E EPS) from Rs 550/share earlier. We have moderated our margin assumptions for FY23/24E given slower than expected efficiency ramp up,” it added.
The brokerage house highlighted that better-than-expected traction in warehousing revenues, continued improvement in product mix leading to margin surprise, and management’s ability to execute upon its Rs 10,000 crore revenue guidance by FY26 are the key factors that can work well for the company.
However, a slowdown in Grade A+/Grade A++ warehousing adoption by the industry, higher competition, and lower-than-expected auto sector revenues continue to remain key downside risks.
According to the data available on Trendlyne, the average price target is Rs 535, which indicates an upside potential of over 15 per cent.
Mahindra Logistics reported a 20 per cent growth in net profit to Rs 12 crore in the March 2021 quarter, mainly driven by e-commerce, consumer, automotive and freight forwarding businesses. The company had posted a net profit of Rs 10 crore in Q4 FY20.
The net sales also rose nearly 20 per cent to Rs 974 crore in the quarter as compared to Rs 812 crore in the March quarter of FY20.
The company also has an upcoming dividend of Rs 2 per share due on 21 July 2022. Mahindra Logistics has declared 5 dividends since July 25, 2018. In the past 12 months, the company has declared an equity dividend amounting to Rs 2.50 per share.
Promoters held 58.18 per cent stake in the company as of 31-Mar-2022, while FIIs owned 20.39 per cent, DIIs 12.13 per cent.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
