Mahindra Logistics To Acquire Rivigo’s B2B Express For ₹225 Crore

Mahindra Logistics is going to acquire the delivery startup Rivigo’s B2B Express for ₹225 crore after the unsuccessful deal with Flipkart, FirstCry.

B2B Express from Rivigo is being purchased by Mahindra Logistics for Rs 225 crore as a result of a sales downturn. 

After failing to reach an agreement with Flipkart or FirstCry, the purchase was made through a slump sale and is anticipated to be finished by 1st November. 

The purchase includes assets, teams, and clients. According to experts, the deal adds value and has an EV/sales ratio of 0.6x based on FY22.

Freight forwarding and B2B express services are part of Mahindra Logistics’ network business, which accounts for 20% of the company’s overall income. 

In accordance with management advice that their focus is on increasing network services market through both organic as well as inorganic route, the acquisition is intended to bolster current B2B express business.

Rivigo has struggled to raise money and keep expenditures under control. Given its warehouse operations, Mahindra Logistics should be able to grow up the unicorn’s digital platform considerably more effectively. 

As of March 31, 2022, Mahindra Logistics’ net cash position was Rs 210 cr, and its operating cash flow for FY22 was Rs 199 cr. 

The acquisition is expected to increase sales by 7-8% and short-term RoCE metrics may be impacted.

With a current valuation of close to $1 billion, Rivigo has raised over $300 million in investment. 

Due to the asset-intensive nature of the business, the company had experienced finance failure throughout the lockout. 

However, the business has already sold 80% of its fleet of trucks and was hoping to raise $50–100 million, depending on the sector. 

Most of Rivigo’s business comes from B2B Express. Delhivery, Safexpress, Blue Dart, and Gati are included in the peer set. 

The B2B express network of Rivigo now has over 25 operating branches and spans over 19,000 pin codes.

Over the past year, Mahindra Logistics has decreased by 25% while the Nifty Smallcap 100 Index has decreased by roughly 1%. 

According to data provided by Bloomberg, out of the 13 analysts following the stock, 77% have a buy recommendation, while the remaining 23% have a hold rating.