Recent Price Movement and Market Performance
Mahindra Logistics has been on a downward trajectory over the past week, with the stock falling 5.73% compared to a marginal 0.06% decline in the Sensex. The trend extends over longer periods, with the stock losing 11.47% in the last month while the Sensex gained 0.82%. Year-to-date, the stock has declined 16.78%, contrasting sharply with the Sensex's 8.65% gain. Over the past year, the stock's return stands at -18.76%, whereas the benchmark index rose by 7.31%. The three-year performance is even more stark, with Mahindra Logistics down 37.57% while the Sensex surged 36.34%. These figures underscore a persistent underperformance against the broader market.
On the day of 24-Nov, the stock underperformed its sector by 1.6%, marking the third consecutive day of losses and a cumulative decline of 4.48% over this period. Intraday, the share price touched a low of ₹313.55, down 2.76%, with heavier trading volume concentrated near this low point, signalling selling pressure. The stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating a bearish technical outlook.
Investor participation appears to be waning, as evidenced by a 55.79% drop in delivery volume on 21 Nov compared to the five-day average, suggesting reduced conviction among shareholders. Despite this, liquidity remains adequate for moderate trade sizes, with the stock able to handle transactions worth approximately ₹0.07 crore based on recent average traded value.
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Financial Health and Profitability Concerns
While Mahindra Logistics boasts an attractive valuation with a return on capital employed (ROCE) of 3.7% and an enterprise value to capital employed ratio of 2.3, these positives are overshadowed by fundamental weaknesses. The company’s ability to service its debt is notably poor, with an average EBIT to interest coverage ratio of just 1.32, signalling vulnerability to interest obligations. This is compounded by a high debt-to-equity ratio of 2.20 times as of the half-year mark, indicating significant leverage.
Profitability metrics also raise concerns. The average return on equity (ROE) stands at a low 2.84%, reflecting limited earnings generated per unit of shareholder funds. The company’s recent quarterly results for September 2025 showed a 24.03% decline in profit before tax excluding other income, registering a loss of ₹8.31 crore. Additionally, the dividend payout ratio is negative at -50.30%, suggesting the company is not returning value to shareholders through dividends.
Despite these challenges, it is worth noting that the company’s profits have increased by 31.8% over the past year, a positive sign amid the broader difficulties. However, this improvement has not translated into share price gains, as the stock continues to trade at a discount relative to its peers’ historical valuations.
Consistent Underperformance Against Benchmarks
Mahindra Logistics has consistently underperformed not only the Sensex but also the broader BSE500 index over the last three years. The stock has failed to keep pace with market gains, delivering negative returns in each of the past three annual periods. This persistent lag reflects investor scepticism about the company’s growth prospects and financial stability.
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Conclusion: Why the Stock is Falling
The decline in Mahindra Logistics’ share price on 24-Nov and over recent periods is primarily driven by weak financial fundamentals and sustained underperformance relative to market indices. The company’s poor debt servicing capacity, high leverage, and low profitability metrics have eroded investor confidence. Although profit growth over the past year offers some respite, it has not been sufficient to offset concerns about the company’s ability to generate shareholder value or compete effectively within its sector.
Technical indicators reinforce the bearish sentiment, with the stock trading below all major moving averages and experiencing falling investor participation. The persistent negative returns over one, three, and five-year horizons further highlight the challenges faced by Mahindra Logistics in regaining market favour.
Investors should weigh these factors carefully, considering both the company’s valuation appeal and its operational risks before making investment decisions.
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