Mahindra Logistics Q1 FY27: Growth returns, profitability stabilises, and Express shows early turnaround

Mahindra Logistics began FY27 with a sharp improvement in reported profitability. Consolidated revenue rose to INR 2,002.9 crore in Q1 FY27, up 23% year on year from INR 1,624.6 crore. EBITDA excluding other income increased to INR 115.4 crore versus INR 76.2 crore a year ago. The quarter also marked a meaningful swing in bottom-line performance, with consolidated PAT at INR 25.4 crore compared to a loss of INR 10.8 crore in Q1 FY26.

Management framed the quarter as the start of a shift from a transformation phase to a growth phase. The stated emphasis remained consistent across the investor presentation and conference call: profitable growth, customer-level economics, and operating discipline. This is visible in segment choices during the quarter, particularly in Last Mile Delivery where revenue was allowed to decline to protect margins.

A key caveat in the reported PAT is that it includes about INR 4 crore of interest on an income tax refund, classified under other income. The CFO noted this is not expected to recur, implying operating PAT was closer to INR 21.4 crore.

Contract Logistics stays the growth engine, but near-term cost headwinds show up

Contract Logistics continued to anchor Mahindra Logistics’ operating model. Segment revenue grew 26% year on year to INR 1,623.1 crore. Gross margin rose to INR 165.5 crore, and EBITDA increased to INR 111.7 crore. EBITDA margin expanded year on year from 6.6% to 6.9%.

At the same time, management acknowledged that gross margin percentage in Contract Logistics softened versus the prior year. On the call, the company cited a mix of near-term factors: start-up costs from opening many new sites in a short period, temporary manpower shortages, minimum wage revisions, and lag effects in passing fuel increases through to customers. The CFO quantified that roughly half of the year-on-year gross margin dilution in Contract Logistics was linked to start-up and ramp-up costs, which should normalise as sites stabilise.

Warehouse utilisation was another operational focus. Management reiterated a target to reduce white space by 95% by September 2026 compared to a baseline of 1.6 million square feet mentioned for Q1 of the prior year, and stated it remains on track.

Express (Rivigo/MESPL) moves into positive gross margin territory

The quarter’s clearest operational inflection came from the Express business (MESPL, also referred to as Rivigo). Revenue rose 58% year on year to INR 152.4 crore. More importantly, segment gross margin improved to INR 9.2 crore from a negative INR 3.6 crore in Q1 FY26, reflecting the gradual effect of restructuring actions.

Management attributed this to interventions across operations, pricing, and sales. These included lane and backhaul utilisation improvements, first-mile and last-mile cost reduction, service level enhancements, more robust quality checks, expansion of value-added services, and pruning of loss-making customers.

Despite the improvement in gross margin, Express EBITDA remained slightly negative at -INR 1.6 crore in Q1 FY27. Management reiterated that EBITDA breakeven remains the priority for FY27, while refusing to disclose volume tonnage or a volume-versus-yield mix. The CEO’s rationale was explicit: volumes can be increased quickly by cutting yields, but that does not serve the turnaround objective.

Last Mile Delivery: smaller revenue base, better mix and margins

Last Mile Delivery revenue came in at INR 71.2 crore, down 16% year on year. The company described this decline as deliberate, driven by a decision to prioritise profitable business over low-margin volume amid pricing and cost pressures.

That repositioning appears to have improved unit economics. Segment gross margin increased to INR 6.3 crore, up 62% year on year, and EBITDA was positive at INR 2.6 crore.

Freight Forwarding: rebuilding after attrition and macro disruption

Freight Forwarding remained the softest segment in the quarter. Revenue declined to INR 45.3 crore from INR 73.8 crore in Q1 FY26. Management attributed the drop to customer attrition during a transition phase, along with geopolitical disruption.

Even with lower volumes, the CFO stated the business maintained a gross margin profile around 10% and remained positive at the EBITDA level. The company indicated it has strengthened leadership and is rebuilding the customer pipeline while maintaining service discipline.

Mobility: growth continues, margins remain modest due to mix

Mobility revenue increased 38% year on year to INR 111.0 crore. Gross margin was INR 8.9 crore and EBITDA was INR 2.5 crore.

On the call, investors questioned why EBITDA margins remain around 2% to 3% even as revenue grows. The CFO explained that Mobility is heavily weighted toward employee transport services, which typically has a lower margin profile than the more lucrative on-call chauffeur model. Management expects operating leverage as the business scales but also indicated that growth will come with some investments.

The company also discussed its airport taxi strategy under the Alyte brand. Management said it is withdrawing from Mumbai airport because the economics did not meet internal thresholds, while doubling down on Delhi airport and scaling with Noida International Airport, where it is the preferred taxi partner.

What management is trying to optimise next

Management’s priorities are framed around four pillars: scaling Contract Logistics, turning around Express, driving operational excellence, and using technology as a differentiator. The company referenced LogiOne as its digital ecosystem for visibility and decision-making, and stated it is working on workflow automation and agentic-AI use cases.

Customer concentration remains a key structural factor. Management stated that Mahindra and Mahindra contributes close to 60% of business. While the CEO said there is no explicit target to reduce this ratio, the concentration is a meaningful dependency. Management also noted that the ratio has moved over time, reaching around 70% three years ago, then dropping below 50%, and rising again as Mahindra’s auto and tractor businesses grew strongly.

Takeaways

Q1 FY27 shows the company’s operating discipline translating into visible profitability. Contract Logistics is delivering strong growth even while absorbing start-up and labour-related cost headwinds. The Express business remains the most important swing factor, and the move into positive gross margin is a credible milestone, even though EBITDA breakeven is still pending.

The near-term monitorables are clear from management commentary: execution on the Express breakeven target within FY27, normalisation of Contract Logistics start-up and labour pressures, continued reduction in warehouse white space by September 2026, and evidence of rebuilding momentum in Freight Forwarding without sacrificing service quality.