Mahindra Logistics Ltd Valuation Shifts to Fair Amid Strong Price Gains

Recent Price Performance and Market Context

Mahindra Logistics Ltd (stock code 1002873) has demonstrated robust price momentum in recent weeks. The stock closed at ₹398.50 on 11 Feb 2026, up 6.65% on the day, with intraday highs touching ₹407.95. This marks a significant recovery from its 52-week low of ₹238.50, approaching the 52-week high of ₹418.65. Over the past month, the stock has surged 29.32%, vastly outperforming the Sensex’s modest 0.83% gain in the same period. Year-to-date returns stand at 25.45%, while the one-year return is 11.81%, slightly above the Sensex’s 9.01%.

Despite this strong price appreciation, the stock’s longer-term returns over three and five years remain subdued, with a 3-year return of -2.24% and a 5-year return of -19.49%, contrasting sharply with the Sensex’s 38.88% and 64.25% gains respectively. This divergence highlights the stock’s recent rally as a potential re-rating phase rather than a sustained long-term uptrend.

Valuation Metrics: From Attractive to Fair

The most significant development is the change in Mahindra Logistics’ valuation grade from “attractive” to “fair” as of 2 Feb 2026. This shift is primarily driven by the company’s price-to-earnings (P/E) ratio, which currently stands at an anomalous -187.45. The negative P/E ratio is indicative of losses or negative earnings, signalling caution despite the stock’s price gains. In contrast, the price-to-book value (P/BV) ratio is 3.45, suggesting the stock trades at more than three times its book value, a level that is neither cheap nor excessively expensive in the transport services sector.

Other valuation multiples include an enterprise value to EBITDA (EV/EBITDA) ratio of 12.83 and an enterprise value to EBIT (EV/EBIT) ratio of 58.14, both of which are elevated compared to peers. For instance, Delhivery, a sector peer, trades at a P/E of 180.47 and EV/EBITDA of 59.24, categorised as “risky,” while Blue Dart Express is “expensive” with a P/E of 47.45 and EV/EBITDA of 15.32. Mahindra Logistics’ EV/EBITDA multiple is more moderate but still reflects a premium relative to some competitors.

Return on capital employed (ROCE) and return on equity (ROE) metrics further underline the company’s profitability challenges. The latest ROCE is 3.74%, while ROE is negative at -3.22%, indicating that the company is currently not generating adequate returns on shareholder equity. Dividend yield remains low at 0.46%, limiting income appeal for yield-focused investors.

Comparative Valuation Analysis with Peers

When benchmarked against its transport services peers, Mahindra Logistics’ valuation appears more balanced but less compelling than some alternatives. For example, VRL Logistics and TVS Supply Chain Solutions are rated “attractive” with P/E ratios of 22.27 and 39.91 respectively, and EV/EBITDA multiples below 10, indicating more reasonable valuations relative to earnings. Gateway Distriparks stands out as “very attractive” with a P/E of 12.3 and EV/EBITDA of 8.11, suggesting better value opportunities within the sector.

Conversely, companies like Blackbuck and Shreeji Shipping & Logistics are classified as “very expensive,” with EV/EBITDA multiples exceeding 30 and P/E ratios in the 29-51 range, signalling stretched valuations. Mahindra Logistics’ “fair” valuation grade positions it in the middle of this spectrum, reflecting a cautious market stance given its profitability concerns and elevated multiples.

Implications for Investors

The shift from an attractive to a fair valuation grade suggests that the stock’s recent price gains have already factored in much of the positive sentiment. While the stock’s outperformance relative to the Sensex and sector peers is encouraging, the negative earnings and low returns on equity highlight underlying operational challenges that could constrain further upside in the near term.

Investors should weigh the company’s improving market sentiment against its fundamental metrics. The elevated P/BV ratio and high EV/EBITDA multiple imply limited margin of safety at current prices. Moreover, the negative P/E ratio signals that earnings recovery is essential for the stock to sustain its valuation premium.

Given these factors, the current Mojo Grade of “Hold” with a score of 61.0 reflects a neutral stance, upgraded from a previous “Sell” rating on 2 Feb 2026. This upgrade acknowledges the stock’s price momentum but also recognises the need for caution amid mixed financial signals. The market capitalisation grade of 3 further indicates a mid-tier size within the transport services sector, which may limit liquidity and institutional interest compared to larger peers.

Historical Valuation Context

Historically, Mahindra Logistics has traded at more attractive valuations during periods of stronger earnings growth and operational efficiency. The current negative P/E ratio contrasts sharply with prior years when the company reported positive earnings, albeit with modest returns. The stock’s 52-week price range between ₹238.50 and ₹418.65 reflects significant volatility, underscoring the sensitivity of valuation to earnings performance and market sentiment.

Sector-wide, transport services companies have experienced valuation compression due to rising fuel costs, regulatory challenges, and competitive pressures. Mahindra Logistics’ current EV to capital employed ratio of 2.78 and EV to sales ratio of 0.65 are consistent with sector averages, indicating that the market is valuing the company in line with its asset base and revenue generation capacity.

Outlook and Conclusion

Mahindra Logistics Ltd’s valuation shift from attractive to fair signals a market recalibration amid a strong price rally and mixed fundamentals. While the stock’s recent outperformance relative to the Sensex and peers is encouraging, investors should remain cautious given the negative earnings, low returns on equity, and elevated valuation multiples.

For investors seeking exposure to the transport services sector, Mahindra Logistics offers a balanced risk-reward profile at current levels, meriting a “Hold” rating. However, those prioritising earnings quality and valuation safety may find more compelling opportunities among peers with stronger profitability and lower multiples.

Continued monitoring of earnings recovery, margin improvement, and broader sector trends will be critical to reassessing the stock’s attractiveness in the coming quarters.

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