Elara Capital has maintained its 'Buy' rating on Mahindra Logistics Ltd, citing that the company is moving from a turnaround phase to a profitability-driven compounding story. Mahindra Logistics is promoted by Mahindra & Mahindra Ltd, the flagship company of the Mahindra Group.

"For the past two years, management has implemented a thorough transformation -- leadership changes, customer portfolio rationalisation, cost reduction, and process standardisation. With most corrective measures now completed, the company is focused on monetising those gains via improved customer economics, higher bid conversion rates, and operating leverage," the domestic brokerage stated.

"The return to profitability in FY26 after two loss-making years, alongside expanding margin and stronger execution metrics, indicates the turnaround is converting into sustainable earnings growth," Elara added.

"Through the exit of loss-making customers, stricter return thresholds, and improved bidding competitiveness, win rates have nearly doubled to 31–32 per cent from 15–16 per cent historically. This has created a stronger earnings profile, with likely a revenue CAGR of ~15 per cent during FY26–29E and an EBITDA CAGR of ~26 per cent, driving margin expansion from 5.4 per cent to 7 per cent, and unlocking meaningful operating leverage & cash generation," it also stated.

Elara noted that while business from M&M continues to expand, the e-commerce segment is emerging as a key growth driver.

"While M&M work continues to grow, strong traction building up in e-commerce segment. With the segment set to grow at 15–20 per cent pa, improving utilisation, customer mix, and warehouse-led operating leverage should enable contract logistics to drive the bulk of incremental revenue, margin, and profit in the medium term," Elara noted.

"Beyond contract logistics, several levers could drive the next phase of earnings growth. The express business is steadily approaching break-even, with Q4 FY26 revenue growing 49 per cent YoY and gross margin improving to 4.8 per cent, while sharp balance sheet deleveraging (borrowings down from Rs 420 crore in FY25 to Rs 40 lakh in FY26) provides flexibility for disciplined acquisition. Focus is on volumetric cargo, new customer addition and profitability. Together, express loss reduction, contract logistics growth, operating leverage, and potential M&A could drive PAT growth from Rs 9.7 crore in FY26 to Rs 268 crore by FY29E and ROCE expansion from 8 per cent to 20 per cent," the brokerage further stated.

Elara Capital has assigned a target price of Rs 495 on Mahindra Logistics, based on a P/E multiple of 27 times FY28 estimated earnings. The target suggests an upside potential of 32 per cent from Tuesday's last seen level of Rs 375.