IPO Alert: Landmark Cars Ltd. files papers for initial public offering

The Indian private vehicle market is estimated to have expanded at a combined annual rate of around 7% since the fiscal year 2016, primarily due to demand growth is driven by improved affordability and the launch of new vehicles models.

Sales of private vehicles are expected to grow at 8-10% annually, from approximately 2.7 million units in fiscal 2021 to about 4.2 million units in 2026.

Landmark Cars Ltd recently filed a preliminary prospectus with capital markets regulator SEBI to raise ₹762 crores through an initial public offering. The public issue consists of a fresh issue of equity shares aggregating up to ₹150 crores and an offer for sale of shares worth ₹612 crores. The IPO also offers reservations for subscriptions by eligible employees of the company.

The management plans to use around $120 crores from the net proceeds for repayment or prepayment of loans availed by the company and its subsidiaries. The remaining amount will be used for general corporate purposes.

Company Profile

Landmark Cars is a leading retailer of premium automobiles in India, mainly dealing in popular brands like Mercedes-Benz, Honda, Jeep, Volkswagen and Renault. The company is also a dealer for commercial vehicle brand Ashok Leyland.

The Ahmedabad, Gujarat-based company has a presence across the automotive retail value chain, including sales of new vehicles, after-sales service, sales of pre-owned passenger vehicles and facilitation of sales of third-party finance and insurance products.

In fiscal 2021, Landmark Cars dealerships sold 1,133 vehicles of the Mercedes brand and more than 4,000 units of Honda and Renault. Overall, the company has sold over 1.3 lakh cars across all the brands it caters to.

Recently, the company entered into a partnership with global EV giant BYD to sell its MP6 electric vehicles, starting in Mumbai and Delhi-NCR.

Key Numbers

Landmark Cars reported revenues of ₹1,966.3 crores for the quarter ended in March 2021, compared to ₹2,228.9 crores in the same period of the previous year. The company had a profit of ₹12.4 crores, against a loss of ₹28.9 crores in the prior-year quarter.

Automobile retailing is a highly competitive business, and Landmark’s rivals include private and public companies having better resources. The company also faces competition from the unorganized sector, mainly unauthorized service centres that offer repair/maintenance services at lower prices. Internet-based vehicle dealers and new-age disruptive businesses also pose a challenge to the company.