Mahindra Logistics Limited (MAHLOG) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Mahindra Logistics Ltd. Q2 FY27 Earnings Conference Call. As a reminder, all participants' line 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. Mandal Chawan from SGA. Thank you, and over to you, sir. ...of the senior management team.

Thank you for our financial results and investor presentations, which were recently posted on the... We will begin the call with opening remarks from management, followed by an open forum for question and answer. Before we begin, I would look at the earnings presentation to share his remarks.

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, acquisible in our performance. The business is now moving from turnaround to acceleration, from fixing the past. Our focus is increasingly on the quality, the depth of customer relationships we build, the length we go to to satisfy our customers, and our ability to consist. A business that is growing bad has increased to Rs. 26 crore a year ago in the previous quarter, while revenue grew 24% YOY. Growth is also efficiency, 0.7% productivity, and our commitment to creating long-term stakeholder value. More importantly, these results demonstrate improving profitability and operating discipline. This is exactly the outcome we have been working towards. Profitable growth, stronger cash generation, and sustainable value creation. Rivego has 27 as a whole also. The business has reached and is beginning to realize the benefits of scale, operating leverage, and to strengthen his leadership position. Growth was driven by new customer additions, deeper wallet shares with existing customers, and a relentless focus on profitability and execution. White space reduction, you would recall, has been an issue in the past few quarters, and we had committed in quarter one of last year that we would reduce our white space 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 one of last year. Having solved the white space problem, we will not be calling this out from now onwards as it is business as usual now. Increasingly becoming a competitive differentiator. Better service levels, higher asset productivity, and consistently positive customer feedback deflects 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 MSPS, which is our B2B Express Logistics business. MSPL or RIVIGO has turned a corner. Business delivered its first ever EBITDA positive quarter and achieved EBITDA positivity for H1, FY27, making a significant milestone in our transformation journey. Momentum is visible in the numbers. Q2 revenue grew 69% YOY, while EBITDA improved from a loss of 9.1 crores in quarter one of last year to a profit of 2.3 crores in quarter two of this year. In 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 now visible in both operating and financial performance. I am very happy to state that the leadership team of MSPL has aligned to these targets and the path ahead is clear to achieving path positivity. With improving operating leverage and growing business momentum, we are increasingly confident about the path ahead and working excitedly to grow this business, which continues to compound strongly. Revenue grew 28% YOY, while gross margins grew 20% YOY, demonstrating that the growth and profitability are improving together. Wyspace reduction, as I called out, has been successfully executed, with vacant space now reduced to just 5% of the June 2025. Commerce businesses continue to be important growth engines, benefiting from favorable market tailwinds and our strong execution capabilities. New customer additions across sectors reflect the strength of our solutions, service delivery, service delivery excellence and trusted customer relationships. Thus, we continue to deliver profitable growth. Q2 revenue grew 33% YOY with gross margins 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 Rs. 68 crore in quarter 2 of FY27 as we continue to prioritize business quality and margins over low value volume. The benefits are clearly visible in a profitability matrix 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. Dick's excellent performance has given us the confidence that our last mile business is now ready to pivot. 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 not letting this business from a no-loss strategy. In our trade for 2017, stood out for 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 2 FY27 was a quarter of execution. We delivered a sharp improvement in profitability. MSVL Rivigo achieved a bit of positivity 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 strength's position as well to deliver sustainable growth 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.

For brief on the consolidated financial performance for Q2 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 margin stands at 10.1% in Q2F27, sequentially up by 40 BIPs versus Q1F27, 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 rupees, up from 85 crores in Q2 F26. EBITDA margin has grown from 5% to 5.9%, which is an increase of 90 BIPs year-on-year. Our discipline on overheads cost and focus on judicious spending is reflected in this year-on-year operating leverage. This is also visible in our adjusted EBITDA, which is EBITDA after removing the accounting impact of NDS 116, which has increased by 110 bps year-on-year from 1.8% to 2.9% in quarter-to-F27. We continue to have low leverage. Our standalone balance sheet has been debt-free since September 2025. At a consolidated level, we have 55 crores of debt, largely comprising of loans for vehicles purchased as part of our asset rights strategy. Overall, we have a consolidated cash balance of 363 crores and therefore net cash of 308 crore rupees. Heyman spoke about Q2F27 being a quarter of both execution and outcomes. The outcome of improving profitability, our asset-right model, and working capital discipline have together culminated in a steadily improving return profile. We generated free cash flow of 52 crores during H1F27 versus a free cash flow of minus 210 crores in H1F26. Our ROC 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 F27. Before I move on to segment performance, there is one call-out that I'd like to make regarding the standalone financials. We have declared a dividend of 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 Q2F27 is at 1,688 crores as compared to 1,317 crores in Q2F26, which is up by 28%. EBITDA has grown in line with revenue to 115 crores as compared to 89 crores in Q2F26. In the last mile delivery business, our revenue for Q2 is 68 crores compared to 88 crores in Q2 F26, down by 23% as part of our conscious choice to move towards a more profitable portfolio. EBITDA has improved from 40 lakhs in Q2 F26 to 1.6 crores in Q2 F27. You may all recall that our strategic portfolio recalibration was largely done during Q3 of F26. Hence, we expect that as we enter the quarter three of this financial year, we will once again win a year-on-year growth in the last mile delivery program. Our trade-forwarding revenue has grown by 12% quarter-on-quarter from 45 crores to 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 1.7 crores in Q2F27, which is only a decline of 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 169 crores in Q2F27. We are pleased to declare We had an EBITDA positive quarter for this business for the first time since acquisition. EBITDA for this quarter is 2.3 crores compared to minus 9 crores in Q2F26. You will all remember that we achieved cross-margin break-even 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 119 crores as compared to 90 crores in Q2F26, up by 33%. EBITDA is also up at 3.4 crores compared to 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 answer.

Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, you are requested to restrict your question to 2 per participant. We will wait for a moment while the question queue assembles. The first question is from the line of Jinesh Joshi from Prabhuda's Leeladar Capital. Please go ahead.

Yeah, thanks for the opportunity, and congratulations on your set of ruffers. So, my first question is on our B2B Express business, which has achieved an EBITDA break over in this quarter. And I believe that the network optimization and the reprising 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 a 12% margin? I am not asking about an explicit guidance, but 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 network expansion. So, some color on that will definitely help.

Thank you, Dinesh. So, let me just broadly share without any – as quarter, we have done the EBITDA positive. In the last quarter, we have 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 PAD 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 PAD 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 three years, while the business was making considerable losses, we were running the business in terms of our tech stack. As having achieved this milestone and want to start investing back into the business. Overall, at a strategic level, we think of MSPL as in the next few years. It will improve the performance every quarter, but this is not a thing which will play out fully in the next six months or one year. This is a kind of, I would say, a decade story. All the people who are our competition have built this business over several years. We have taken now three 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 our freight forwarding business. So this is where we stand. 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 two, three, four quarters. This is a business that will require a huge amount of hard work, a huge amount of passion and commitment from our leadership team, and also investments. As we achieve back 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 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 MLN, and it will require a 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 airline well-run is highly profitable. An airline poorly run is not profitable at all. Similarly, this business is safe. 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 teams, we will build our capabilities, we will build our network, we will build our technology, we want to keep a very strong focus on profitability and customer satisfaction. Sorry, Jinesh, for a long answer, because there is no short answer to your question.

No, sir, understood. Pretty well explained. One last question from my side, and that pertains to our gross margin performance in the contract logistic business. Now, if I recollect properly, in the previous quarter, the margin was at about 10.2%, And it was impacted by certain temporary factors like the startup call with respect to rapid site elations. And I think there was some manpower shortages as well. Apart from that, some wage revisions as well as we must have seen some kind of customer onboarding that must have happened. And also the fuel pass-through clauses must have been activated. Really, our growth margin improvement on a sequential basis should be higher than we have reported. So maybe if you can just talk a bit about that.

Fuel pass-through has happened in total. Whatever was the previous quarter, that has been completely passed on. So there is nothing, and you can see that effect coming in the 30 BIFs improvement that we have seen. Apart from that, there was a big issue last quarter on the manpower cost, which is still has not been passed out fully. In certain areas, we could pass but new things have come in. For example, I'm sure you are aware of the new rule that the government has brought in in terms of Provident Fund. The slab has been changed from 15,000 to 25,000 rupees. And there are a few more changes happening. Some minimum wages are still under pressure. So manpower, I would still say is manpower cost is still not fully passed through. And it's difficult to pass through that because there are no written contracts on both sides except that minimum wages get passed on. So, like in fuel, there are clear contracts that if beyond a certain X percentage here and there, it gets passed through. And the fuel cost was a very high increase of 8 rupees, 10 paisa. So, that was not a very difficult thing. Manpower, while we are working on improving the productivity of our manpower, but I think manpower will take a little bit longer to pass through. And that is what is playing out in our gross margin improvement. However, as Isha called out in the previous comments in the last quarter and the quarter before that, we are looking overall for a 100 bips improvement in our gross margin, and we stay committed to that.

Understood, sir. Thank you. Thank you so much and all the best.

Thank you. The next question is from the line of Krupa Shankar N.J. from Evendus Park. Please go ahead.

Good evening, and thank you for the opportunity. First of all, congrats on achieving the EBITDA profitability in MESPL, the Express business. Just wanted to get some sense around the QoQ growth momentum which you've seen in this business, right? It's been double digits. Yes. Qualitatively, I'm not looking for exact numbers, but qualitatively, can you just share what would have been led by realization and volumes, or if you can just say what was the bigger driver amongst the two? And is it fair to assume that given that festive period is fairly delayed this year, this would result in a better growth or there will be a spillover of volumes to the third quarter, which will continue to drive operating leverage? That's my first question.

So the improvement quarter-on-quarter in MESPL is driven by a mix of both volume and yield. I would say that for this current quarter, it is more yield than it is volume because we have taken selective calibration actions in line with our strategy to improve unit economics. And hence, like I said, it is more weighted towards yield than it is towards volume. As far as the festive momentum goes in the spillover into Q3, I'm not going to sort of guide on it specifically for Q3, but I can tell you that given the size of our business and all the actions that we are seeing in this business, we are continually seeing an improving trend in volume, and we hope that that will continue through the next few quarters as well. So we will continue to work on all these levers as we move towards our target of fat profitability.

Very clear. The second question is on the contract logistics business, and, you know, just wanted to, you know, follow up on the previous one of the questions asked. Was there any capacity buildup for the festive period, especially towards the e-commerce festive sale, which has been a drag at the same time, or there's no specific impact of that? Right. And just taking that one thing forward, you did mention, you did mention about the tech platform development and how you're going to make investments towards both the businesses, right? So when you quantify and probably speak a little bit more about these businesses, how it will benefit both the, you know, segments like your contract logistics and expertise.

Yeah, so let me answer the first question. First, we have built up scales, especially to target the peak. That's the nature of the industry, and we play quite aggressively in that. So we have come up with quite a few flex sites on our e-commerce and last mile delivery business. These always come at higher cost because we need to hire people, train people, and then they are put to use. And this time, again, season got a little bit here and there, and we don't get much visibility till the season is actually on our heads. We just get like three, four days' notice before we have to prepare, and so we take calls on our side of manpower to bring them earlier and train them. So, those calls are still there, which play out in every quarter, three in the festive, will play out again this year. This is the nature of the industry, and if you are a serious player there, and since we need to keep our customers happy, we take such calls. And the second question was, we are not treating this as a tech platform, we are treating this as a business transformation project. We won't like to share any numbers because we believe that we have come up with a solution which is very frugal and don't want to share in the public forum what we will invest into this. But I can tell you that this will be a very good, very simple, trying to work on a few things. But we believe that this will add significant value to our contract logistics business, Especially initially on the transportation side, because we are doing the programming phases, and then MSPL and later on the warehousing side. This will completely change the company's way of working, simplify the company, automate our processes, reduce our cost, and improve our customer satisfaction. The customers will get full end-to-end visibility on their loads, and we will be able to use quite a few of AI use cases so that there's a lot of manual intervention that we currently do that can be done by agents. So we have conceived the project in a lot of detail. However, I would like to share more details once we start the execution of the project. That will still be somewhere like quarter four of this year.

Got it. So, what I wanted to actually touch upon was that this is more towards existing operations, you know, making it better, enhancing it, rather than this tech as a front-end solution for the clients, right? So, that's where I was probably coming at.

Yeah, so this will, so what we believe is that with our current quarter, but it is, it is being done with, that cannot, manual effort cannot continue at this pace. We have to leverage technology. And that is what we are trying to bring that this technology will simplify our processes, help us scale better. And right now, many of our tech packages are working in silos. This will bring everything on one platform. And currently, suppose you are my customer for PTL and FTL. I serve you through two different platforms. Going forward, I will serve you through a single platform. So even if you are giving me a full truckload or a part truckload, one parcel, you can still see it end-to-end where your loads are and how we are doing against our commitments. So I think it will be a really good customer experience and a very good experience for our own teams to be using this tech platform and executing better.

Understood. Thank you. Thank you for the answer.

Thank you. The next question is from the line of Aachal Lohade from Noama Institutional Equities. Please go ahead.

Yeah. Good evening, team. Thank you for the opportunity. Congratulations for the excellent show once again. Sir, I wanted to check first on the contract logistics. Given the monsoon challenges we've had in this year, How do you see that impacting in terms of our customers? And if you could call out what is the mix of the tractor business or M&M within the entire portfolio, if you could call out that. That's my first question, sir.

Arjal, I mean, we all know the monsoon has been, I think, 14% below the LPA number as a country as a whole. However, it has been not similarly distributed across states. There are some states which have done extremely well and some states have done extremely bad in terms of receiving the monsoon rains. So it will play out differently in different regions. On any call out on specific industry, you may need to approach those people there. From our side, we can say that whatever variations we may have from state to state, region to region, product category to project category, or customer to customer, at an overall MLL level, we will be achieving what we have set out at the beginning of the year. So, if one pedal slows down, we will start pushing the other pedal to make sure that we are able to do what we kind of like committed to our board.

Got it. The other question I had for the contract logistics, you know, you mentioned that, I mean, compared to the gross margins of about 11% in FY26, we are running at about 10.2 and we have seen improvement QOQ to 10.5. That 100 basis point, what you called out, was that gross margins or the EBITDA margins for the contract logistics? Thank you, sir.

We didn't specify any number. We had specified that we are looking at improving gross margins by about 100 BIFs, but we didn't call out 11 or any number like that.

No, I'm just looking at the reported number, sir. FY26 was 11%. So that 100 BIFs point, should I look at from the current level of 10.2, 10.5 or to the full year last year? I was more So, curious to know that.

Yeah, you can, Achal, you can look at it. We talked about it when we were exiting last year. So, you can look at it from last year exit. As Heman mentioned, in the current period, we have had a lot of pressure from a labor cost perspective and other factors, including pre-festive build-up, that caused some ups and downs in gross margin through the year. But, directionally, we will continue to look at 100 BIPs improvement from exit of last year.

And that's at gross level, just to clarify. Sorry, I'm pestering on that.

No, you're right. You're right, Achor. That would be at the gross level.

Understood. Understood. And just if you could, sir, talk about the CAPEX, what is the CAPEX plan for the current year and which all segments we should look at the CAPEX spending?

CapEx spending will be, as per our guidance that we gave, it will be closer to like 100 crore kind of a number, plus minus 10 crore here and there. So you can almost take it like 110 crore kind of a number. We are on track. In H1, we have spent almost half the amount. So we should be on track to do that. And we have a very strong, we have established a very strong approval process internally in terms of our CapEx spending and what kind of return metrics we are targeting there. No project is going below that, and we are very, I mean, judiciously tracking once the project is implemented, how the project is doing as per the business case approvals. So, that process is working very well. So, we are looking at good growth coming from CapEx and looking at improving our profitability in that sense.

Got it. If you could call us, which divisions it's largely oriented towards?

Mostly in contract logistics, we have put CapEx and also in our two-by-two joint venture where we do car carriers for our auto and tractor business for Mahindra, we have added CapEx. So, mostly on contract logistics and two-by-two.

Got it. Thank you and wish you all the best. Thank you, Ajit.

Thank you. The next question is from the line of Sanya Jain from Care PMS. Please go ahead.

Hi. Thank you for the opportunity. Just two questions. First of all, with now MLL operating at a higher base and express showing significant signs of turnaround, what would be the key road drivers if you could call out for the next two, three years?

For contract logistics, our key drivers would be the new clients that we add and getting higher share of wallets from our current customers. We are seeing very strong tractions in our e-commerce business, in our manufacturing and telecom vertical, in our last mile delivery. As I just said that till two quarters back, I was myself saying that this business is kind of a no-loss strategy business, whereas now I have called out that this is a growth business for us going forward. So, I mean, these are the verticals we are seeing. In certain verticals, we are still building up that kind of capability. We have called out freight forwarding as one such business where we have a new leadership team which is driving the business now very hard and building this business up for further growth. But overall, we know that overall the geopolitical situation is also challenging for this business. But as things settle down and as our team kind of transitions into this new role, I think even freight forwarding business going forward will be a very good vertical for us. So, broadly, we are seeing growth across our verticals, and we should continue to see that our execution has improved. We are getting very high scores from our customers. We are winning best supplier awards from many of our customers every quarter. So, this is giving us confidence, and once the customers are happy with us, there is no reason that why we will not win more business from the same customers, then why we will keep adding more logos to it. On MSPL side, clearly, we will focus on getting, like Isha called out in the last quarter, we did a lot of work on improving our yield. Going forward, we have still some more work to do on that side, but mostly now the growth will be volume rate as we start expanding our network and add more hubs and increase our current hubs capacity. We're adding a lot of real estate also in that sense because we need to handle higher capacities there. So, these are broadly the growth drivers which will happen, but we are basically seeing good growth across all our verticals.

Got it. And second was, are there still any low-hanging fruits in terms of cost optimization across businesses? Like you have mentioned that we have cut down all the loss-making contracts. Anything other than that that can still help in the margin expansion?

And now, I think it's mostly played out. Whatever we wanted to do, we have achieved. I think now the business is running a very tight ship, and now the focus has shifted from cost control. I mean, cost control will always remain a focus, but as a key lever, I think now it's the growth, business growth that will drive us for the next few quarters. We are focusing more on that. We are winning a lot of new businesses. We took up over the last year, we took up a challenge of winning new businesses by three and a half times. I won't share the exact numbers, but suppose we achieved X crore of new business last year. This year, we took up an internal target to grow it by three and a half times. In H1, we are doing better than that. And this is what is giving us confidence that if we are winning businesses like that, then the growth momentum will continue to shape our trajectory forward. But to precise answer to your cost thing is, I think that has played out. I mean, a little bit here and there, more will happen in the next two, three months. But we are not, like, counting much on that. Mostly, it will be now growth-led.

Okay. Thank you.

Thank you. The next question is from the line of Ankita Shah from Ilara Capital. Please go ahead.

Yeah, thank you. And congratulations, sir, on the performance in the Express Logistics service. Sir, my question is on the last mile business, straightforwarding, and mobility. All of them are, you know, doing low single-digit margins. You know, what is the thought on this business? You know, what is the capital employed in the business? And, you know, how are we trying to take this forward? We understand that there are macro challenges, geopolitical issues, which is impacting businesses. But I more want to understand from your thought process on things which are in our control, which we are doing to grow the business. There is, at least in mobility, there is revenue growth, but there is no margin expansion there. So, given that the company's focus is more on the profitability side, what are we thinking on these three business verticals? That's the first question.

Ankita, thank you. As I shared earlier, LMD business, we are pivoting from this quarter onwards. From a no-loss strategy, we are saying that this will be a growth strategy. This business doesn't require much capex. It's a very frugally run business. I mean, just to share, I mean, in this business, it is in rupees, thousand rupees that we control, not even in lakhs. So it is a very tightly run ship with very little capex requirement. And we are seeing that this business can be a very major growth driver for us, profitable growth driver for us going forward. And why we have changed the pivot is clearly that we have run some pilots internally in the last six months, and that is giving us confidence that this business can really grow very well for us. Our teams are highly charged, very motivated, and they're really working very hard down the clock to make sure that our LMD business can actually scale up very well, and not in the long term, I'm saying even in the medium term. So you will start seeing growth in LMD at a profitable level very soon. On freight forwarding, as I said, we had some kind of a leadership change two quarters back, and a new leadership has come in, and they are transitioning into it. They are building the whole team again. The nature of this business is such that a new team has to now build the business again. The geopolitics situation is not helping at all. If you track the container prices, you will see that the spot rates are like totally prohibitive and nobody is willing to sign long-term contracts in these times when nobody knows what is going to happen tomorrow. So the business challenges on geopolitics side are not helping at all. But as things settle down, and I don't know when they will settle down, that's anybody's call. But I would like you to think that our H2 will be a build phase for freight forwarding, and we want to give our team time to nationwide the business, win new businesses, and build the whole business in H2. So, the real kind of work will happen in FY28 on freight forwarding. Both these businesses are part of our contract logistic, no, sorry, LMD is part of our contract logistic business, and freight forwarding, we believe, helps us serve the same customers from, as we said, our aim is to become the number one logistic service provider. So, when we go and pitch the business for our PTL or pitch the business for our full truck load or any warehousing, we also pitch, the same team can pitch the business for freight forwarding as well. So, it is part of our offering and it consumes zero capex. Freight forwarding doesn't take any capex at all. So, this is a business that you build and our customers feel happy that we are a single point kind of shop for them where they can take it. Coming to mobility, mobility, we have to think about business in two ways. One is the B2B business and the B2C business. B2B business is a large part of our overall business here. And B2C is much smaller compared to the B2B part of a business. B2B, we have long-term contracts. So, again, there is a lot of visibility on our revenue and our gross margin side because these are all marquee customers that we have across the country. I mean, most of the big brands we serve, and this is again, since part of long-term contracts, it's a very good business for us. On B2C, we are running a few sites, but here our strategy is a very concentrated strategy, focused only on very few cities. You know that Alight brand that we launched, we are doing only in Delhi. We have not even launched that brand in Mumbai So we continue to focus B2C in few cities and do those cities very well. And as we gain more confidence, as we get more process orientation, execution well there, we will then start adding cities as the business demands. So this is how, Ankita, we are thinking about it. Clearly, LMD is moved from a no-loss strategy to a growth strategy. Trade-forwarding is a business in the build stage, and I think next year it will start delivering the results. And in mobility, we continue to drive very hard on the B2B part of the business, and B2C, we focus on a city or two, and then as we scale up, we will keep adding cities. This is broadly we are thinking about it.

Sorry, before you ask your next question, you also asked about sort of ROC and return profile on these businesses. I want to add that for all three businesses that you mentioned, capital employed generally is quite low, because these are low from a CAPEX commitment and working capital investment perspective. So, therefore, as long as these businesses are profitable, which they are, and they continue to deliver on profitability, the return profile remains pretty good, right? So, it clears our threshold, and therefore, from a ROSI perspective, they do continue to stack up for us. I just wanted to add that color.

Got it. Just to follow up on what Hemant was mentioning on mobility side, what would be the rough mix between B2B and B2C in mobility segment?

We don't really disclose that mix, Ankita, but it is quite weighted towards B2B. B2C is a very small part of our overall business.

Got it. Okay. My next question is on the express segment. What would be the segments or sectors or industries which are contributing to the B2B express volume growth?

We are very big in automotive and manufacturing side. We are over-indexed on that industry. But while I say that, we also serve many other industries and we want to diversify the business. You know that automotive can be a cyclic industry, so we want to diversify from there and we are doing that. So I would say we are very well diversified in that sense. But automotive and industrial manufacturing, they are the big ones. E-commerce is playing out now for us. So, that's how we look at that, yeah.

So, automotive remains strong both for contract logistics also and for B2B Express also.

Yeah, automotive manufacturing and industrial.

Got it, got it. And one last question. Despite a strong growth in revenue in these contract logistics, I mean, consistently double digit growth in contract logistics business. Do we have, you know, scope for margin improvement or EBITDA margin improvements beyond 7%? Given that our mix continues to be skewed towards M&M and auto sector, what all levers do we have, if any, to improve the market? I'm interested to know more about the levers that we have for margin improvement, that's it for myself.

So, I genuinely believe that there is scope to improve margin, and this is what we will keep running.

But despite, I mean, keeping the same mix, will we be still able to improve the margin, or will it require a change in the mix to improve?

No, even within the same mix, we can improve the margin. I think there is still more work to be done. I think there's several levers playing. There's not like one lever which will play out, but operating leverage obviously will help us. We are trying to improve more warehousing compared to transportation because warehousing has better margin than transportation. We want to improve our efficiency, as I called out on manpower, because, you know, manpower costs have gone up, but they have not been fully passed on and difficult to pass on those kind of costs. So, we want to work on efficiency, where we have taken a lot of actions, and we believe that the results should start showing going forward. Similarly, within our 3PL business, I think the mix of certain segments can help, and we have full visibility customer-wise, segment-wise, which are more profitable. So, we will kind of pushing the pedal harder on those profitable customers, where we will do. And clearly, there is a differentiation between customer to customer on that side. So, as we work on our customer excellence and satisfaction of our customers, I think there is a better ability for us to charge a little bit higher price from our customers. So, and as we already called out that all our new investments are now meeting a much higher threshold. So, that also is helping us overall in getting a higher bid and a higher IRR and ROSI. I would say, Ankita, I totally agree with you, that there is an opportunity for us to improve our margins in the contract logistics space. I don't think we are satisfied with the current margins.

100-bit improvement is for next year, right? From 4Q to 4Q27 that year.

No, Angeita, you have been on our calls all the time. We have not given any timeline, but this, we believe, is our target, and we should achieve this.

We want to have said in the past, and again clarify, because this point keeps coming up, that margin improvement target that we have, I am again repeating, is over the medium term, medium term, and I have specifically clarified in the past, does not mean two quarters, four quarters. It will take time. All the levers that Hemant mentioned, you know, we are putting in play, but contract logistics is a thin margin business, and it does take time for all these levers to play out. So, you will not see that improvement within two quarters, within one year. You will only see the same term, and there will be pluses and minuses along the way. Directionally, we are working on all these levers. They will take time to play out.

Got it. Wish you all the very best. Thank you.

Thank you, Ankita.

Thank you. The next question is from the line of Meep Bhuva from Integrity Ventures and Partnerships. Please go ahead.

Yeah, hi. Congratulations on a good set of numbers. I have joined the call a bit less, so maybe I might have missed. I just wanted to understand the mix of the share of the amend and the total revenue of the contact project.

Thank you, Amit. Isha will take this question. Sure.

Amit, we called out that in F26, the share of M&M as total M&M completed was to be broadly in the 60% zone.

Okay, okay. But we have, I think, guided with the share of M&M will reduce and other customer share will increase. So, are we on that track to achieve the best model?

Meek, in the last few quarters, we have clarified this, that there is no internal target to reduce M&M share of our pie. We believe that M&M is a great customer, anchor customer for us. On auto side, you know, they are beating the industry growth and they are doing so well. On tractor, they are the world's largest tractor company by volume. So we are actually very happy with M&M being our anchor customer. And if their growth is more than the growth of the industry, their pie will keep on increasing. So, while we've been wanting to win new businesses with other customers, and we will not leave any business if it meets our threshold on profitability, but there is no internal target to reduce M&M share of the pie. If M&M does well, we do well with M&M. In fact, our target is to win 100% of M&M business.

Okay. Okay. Got it. Got it. Thank you. Thank you so much.

It's a very good customer for us. I mean, it's a very reputable company. It's a great brand to have. They pay us exactly on time, and we have great relationships.

Yeah, sure, sure. Thank you. Thank you so much, and all the very best for the future. Thank you, Meeth.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

Thank you all for joining us today for questions and provided valuable insights into our performance and strategy. If you have any further queries or need any additional information, please feel free to reach out to our team or our investor relations advisor at SGA.

Thank you. On behalf of Mahindra Logistics Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.