Mahindra Logistics hopes Rivigo can deliver a swift turnaround

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₹1,451 crore in the quarter. Ebitda margin came in at 3.9%, down more than 100 basis points yoy but up 20 basis points sequentially. However, uncertainty around the path to profitability for its B2B express business has clouded the company’s medium-term outlook and continues to be a drag on overall profitability.

The B2B express business, which it acquired from logistics startup Rivigo in 2022, contributed 7% of overall sales in Q4. Revenue from the segment was down about 8% yoy at ₹97 crore in the quarter. Mahindra Logistics once ran a small B2B express business of its own before it snapped up Rivigo’s B2B express business in November 2022.

The company faced integration challenges after the acquisition, resulting in lower-than-expected volume growth and subsequent losses, said Ankita Shah, vice president of institutional equities research at Elara Securities (India). "Rivigo's turnaround is crucial for Mahindra Logistics to fare better," Shah added. Also read: Mahindra to acquire logistics unicorn Rivigo's B2B express biz for ₹225 crore “The road ahead in terms of margin improvement will be tougher as utilisation in the negative-gross-margin Express business has already reached 85% levels," cautioned Kotak Institutional Equities in a report dated 23 April.

Even so, Mahindra Logistics expects a further pick-up in utilisation levels as its networks have been redesigned. Management now aims to achieve Ebitda-breakeven for the express business by the end of Q2FY25. Previously, it aimed to achieve this by the end of FY24.