Key takeaways of the call

Warehouse space under management as end of Dec 2020 stood at 17.2 million square feet (MSft) compared to 16.3 msft as end of March 2020.

Sustained growth in Revenue and Profits driven by strong demand across end markets. The company continue to see improving performance, driven by market recovery and execution of strategy of providing customized, integrated solutions to its customers.

Q3FY21 revenue was the company's highest-ever quarterly revenue and the strong growth in revenue is facilitated by significant contribution from E-commerce, Automotive and Freight Forwarding businesses.

Strong momentum in Supply Chain has offset the continuing softness in the Enterprise Mobility segment, which remains impacted by the Covid-19 pandemic.

SCM business registered a growth of 24% to RS 1009.9 crore driven by 20% growth in M&M business with non M&M driven by 28%

SCM Business: Broad recovery in Q2FY21 hasshifted gear with consumption return to pre-pandemic level further boosted by festive demand across the sectors. The auto sector that was in slowdown pre-covid year further accelerated by pandemic has seen accelerated growth in Q3FY21 driven by strong demand from semi-urban and rural markets. Continued uptick in volume accelerated further by festive season leading to positive volume growth for customers and cascading effect for the company. In auto the farm sector has seen strong growth with strong cash flow in rural areas. Especially the south has seen strong uptick on account of festival season of Pongal. On flip side, one large auto OEM customer has shut down his Maharashtra unit effective Dec 31, 2020, which is expected to have some impact going into Q4FY21 onwards, but the company expects the new accounts is expected to compensate the impact of this. Ecommerce continue to see strong growth with all players keen on adding more suppliers to their platform as customers continue to prefer e-commerce as purchase option. Customer partner keen on expanding coverage. Launched some fulfilment centres and entered grocery. Expect to see strong growth in electronics and bulky products going forward. Post pandemic companies in FMCG, pharma has to review their distribution fulfilment mode which translate to facilitated good uptick for the company.

COVID vaccine distribution has provided immense opportunity for companies such as Mahindra Logistics. Significant volume flow not happened in Q3FY21 but expect to happen from next fiscal.

Continued momentum in value-added services & solutions with improving performance especially in Ecommerce, Consumer and Freight Forwarding verticals.

Some tightening in freight forwarding business. Globally freight forwarding rates has seen sharp surge and that impacted the rates for East Asian and European links. With this trend is expected to continue in near future.

In domestic market diesel price hike, liquidity crunch faced by transporters and farmer strike especially in north India. But the company has maintained its contracted service level.

Some uptick in terms of new order intake. In Integrated customized solution - Will be starting end to end supply chain management for a large durable company in the country, expanding distribution in north India for a large pharma company, defence service provider, e-commerce large grocery fulfilment centre in Eastern India. In auto won an account with foreign OEM.

Increase in depreciation on account of increased volumes from Warehousing services

The company continue to expand and grow its service lines. During the quarter, the company has launched its Last mile delivery service, ‘Edel' which uses 100% electric powered vehicles. The service has been launched in 6 cites; to be expanded to 14 cities in coming 12 months. Initial customer feedback is good.

The business environment is improving and evolving at the same time.

Look forward to stronger revival in economic environment and with it, the improving demand across end-markets will create more opportunities for growth.

Gross margin declined by 46 bps in Q3FY21 and the decline is largely due to volatility in transport business with diesel price there by hurting transport margin as well as lower margin in start-up phase of new projects launched during the quarter.

Continue to expand warehousing capacity (multiple locations) with few more warehousing getting operational in coming quarters.

SCM M&M Business: Strong farm sector growth, long mile services as well as additional value added services in auto sector has contributed to 20% growth in SCM M&M business despite auto volume growth of M&M is modest. Farm sector volume growth in Q3FY21 by over 30%.

Leaser rental number moves in-terms of space and under Ind AS 116 the lease rental was accounted as part of depreciation and interest cost. With increase in lease space both interest and depreciation moved up.

Closure of operations by auto OEM in Maharashtra - It is a small business which is already compensated by new orders.

Currently, the last mile delivery services is currently dominated by large packages but now with EDEL the company expects the small package business to grow.

Q1&Q2 order intake are already started reflecting in Q3FY21 numbers that along with festival uptick has provided further growth momentum in Q3FY21. However the Q3FY21 order intake are yet to get reflected in the numbers.

The company in EDEL expect to ramp up the fleet to 3000 vehicles, a mix of partner fleet as well as company owned. The fleet has to be dominated by partner fleet with little investment by the company in fleet initially.

Top 20 accounts contribute less than 60% of the revenue of the company.