Landmark Cars IPO kicks off: Can this car retailer deliver big gains?

The company consists of a fresh issue of Rs 150 crore, whereas existing promoters and shareholders will offload shares aggregating to Rs 402 crore.

Shares worth Rs 1 crore have been reserved for eligible employees of the company, who will get a discount of Rs 48 per share. The lot size for all investors have been kept in the multiple of 29 equity shares.

Ahead of its IPO, Landmark cars allotted 32,66,797 equity shares at a price of Rs 506 apiece to 14 anchor investors, including Goldman Sachs, Morgan Stanley, Maven India, Pinebridge,

and others to raise about Rs 165.3 crore.

Incorporated in 1998, Landmark Cars is a leading premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault. It also caters to the commercial vehicle retail business of

.

The company offers services such as sales of new vehicles, after-sales service and repairs, sales of pre-owned passenger vehicles and facilitation of the sales of third-party finance and insurance products.

Qualified institutional buyers (QIBs) will get 50% of the net offer, whereas 15% of the issue is reserved for non-institutional investors. The remaining 35% portion will be allocated to retail bidders.
and are the book-running lead managers to the issue, whereas Link Intime India has been appointed as the registrar for the same.

Here is what a host of brokerage firms said about the initial public offering of Landmark Cars:

Rating: Subscribe for listing gain

Landmark Cars has demonstrated stellar revenue growth at 52.17% last year. It is well placed in its target markets with little threat from bigger players, said Arihant Capital in its pre-IPO note.

“Considering its strategies to gain from the entire customer value chain, entering the EV segment and plans for growing presence in the after sales segment, the company is well poised to grow its market share in the years to come,” it added with a subscribe for listing gains rating.

Choice Broking

Rating: Subscribe with Caution

At the higher price band, the company is demanding a P/S multiple of 0.7x, which seems to be significantly higher than the international peers having an almost similar business profile, said the brokerage with a ‘subscribe with caution’ tag.

Marwadi Financial Services

Rating: Subscribe

Considering the FY22 adjusted EPS of Rs 16.72 on a post-issue basis, the company is going to list at a P/E of 30.27x with a market cap of Rs 2,003.3 crore. There are no listed companies of Landmark Cars, said Marwadi Financial Services.

“We assign a ‘subscribe’ rating to the IPO as the company is amongst the leading automotive dealerships for major OEMs with a strong focus on high-growth segments,” it added. “It is available at reasonable valuations.”

Broking

Rating: Neutral

Landmark intends to focus on expanding its business in high-growth segments like premium and luxury passenger vehicles including UVs and electric vehicles. They aim to leverage their relationships with the OEMs, said Religare.

“The company also executed a letter of intent with the automaker BYD, a leading player in the global EV market to be their dealer in the National Capital Delhi and Mumbai in respect of their electric passenger vehicles,” it added with ‘neutral’ rating.

Securities

Rating: Subscribe

Over the next couple of years, the premium market segment is expected to grow at a CAGR of 10-12% while the luxury vehicle segment is expected to grow at a CAGR of 14-16%, said Reliance Securities.

Landmark is likely to report healthy numbers over the next couple of years led by strong growth in the premium car segment, it added with a subscribe rating on the IPO, keeping in view healthy financials, strong presence, leadership position, premium automotive retail business and valuation comfort.

ICICIDirect Research

Rating: Not Rated

Sales at LMC have grown at a CAGR of 15.8% over FY20-22, with the company turning meaningfully profitable in FY22. Its PAT stood at Rs 66 crore in FY22, led by an improvement in EBITDA margin profile to 6%, said ICICIDirect Research.

“Consequently, RoE and RoCE as of FY22 are at 27% and 15%, respectively. At the upper end of the price band, it is valued at 28x P/E as of FY22,” it added without rating the issue.

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