LANDMARKNSEFebruary 18, 2025

Landmark Cars Limited

8,965words
125turns
10analyst exchanges
4executives
Management on call
Sanjay Thakker
CHAIRMAN AND EXECUTIVE
Aryaman Thakker
EXECUTIVE DIRECTOR – LANDMARK CARS LIMITED
Surendra Agarwal
CHIEF FINANCIAL
Akhil Parekh
B&K SECURITIES
Key numbers — 40 extracted
4%
et. The threat of tariff has also made the situation more complex. The Indian auto market grew at 4% in volume and 9% in value terms in calendar year 2024 after a rapid growth in 2022 and '23. The O
9%
tariff has also made the situation more complex. The Indian auto market grew at 4% in volume and 9% in value terms in calendar year 2024 after a rapid growth in 2022 and '23. The October-December q
15%
Over the past decade, Landmark's service business has maintained a strong CAGR of approximately 15%. However, the recently added workshops have yet not reached its full operational capacity. As the
INR1,000 crore
h trajectory. It is also noteworthy to note that the service revenue for Landmark will soon touch INR1,000 crores per annum number, which is a big milestone in our journey.
3.9%
was successfully achieved ahead of its schedule. As of quarter 3, the personnel expenses stood at 3.9%, while the other expenses were reduced to 3.5%. Our disciplined approach to expense management ha
3.5%
. As of quarter 3, the personnel expenses stood at 3.9%, while the other expenses were reduced to 3.5%. Our disciplined approach to expense management has strengthened our financial position. The se
12%
in India for 10 years in a row. They sold 19,565 vehicles in calendar year '24, which was an over 12% increase over '23. 25% of these sales came from top-end vehicles, which are cars priced over INR1
25%
n a row. They sold 19,565 vehicles in calendar year '24, which was an over 12% increase over '23. 25% of these sales came from top-end vehicles, which are cars priced over INR1.5 crores. They now h
INR1.5 crore
12% increase over '23. 25% of these sales came from top-end vehicles, which are cars priced over INR1.5 crores. They now have over 2 lakh cars sold in India since inception. Landmark continues to be the larg
2 lakh
se sales came from top-end vehicles, which are cars priced over INR1.5 crores. They now have over 2 lakh cars sold in India since inception. Landmark continues to be the largest partner for Mercedes-Ben
16%
India since inception. Landmark continues to be the largest partner for Mercedes-Benz with over a 16% volume share. Our upcoming facilities in Patna are likely to begin operations in the beginning of
5%
The brand has a new product planned every 3 to 6 months. Landmark has already achieved a close to 5% market share for MG Motors in India. A new vertical, MG Select has been launched recently. This w
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Guidance — 20 items
Sanjay Thakker
opening
“Over the past decade, Landmark's service business has maintained a strong CAGR of approximately 15%.”
Sanjay Thakker
opening
“We had set a target to reduce personnel expenses and other expenses below 4% on pro forma revenue by end of 2025.”
Sanjay Thakker
opening
“Clearly, the period ahead will be full of speed bumps and surprises this year.”
Aryaman Thakker
opening
“These stores will achieve scale and start contributing as expected over the next 3 quarters.”
Aryaman Thakker
opening
“Initially, 2 products will be launched, the MG Cyberster and the MG M9 MPV with more to follow going ahead.”
Aryaman Thakker
opening
“The new Kia Syros, which was launched in January, has garnered a positive response, and we expect it to add around 15% to our Kia volumes this year.”
Aryaman Thakker
opening
“The eMAX 7 has also recently received its homologation certificate, and we expect this to help increase its volumes.”
Arnav Sakhuja
qa
“And I also just wanted to get a bit of an understanding into the macroeconomic environment of EVs, so because I was reading some news that globally apparently POPs have recently announced that they will be scaling back on some of their EV plans, and they will be increasing their share of internal combustion engines instead.”
Pritesh Chheda
qa
“Sir, what will be the cash flow for 9 months?”
Sanjay Thakker
qa
“So this will reach our normal kind of a business very quickly.”
Risks & concerns — 6 flagged
The global auto industry is going through quite an uncertain time currently.
— Sanjay Thakker
Our revenue and profitability saw significant growth this quarter, supported by a strong festive period, the operationalization of new outlets and the positive impact of recent car launches.
— Aryaman Thakker
PAT is impacted primarily due to high depreciation and Ind AS effect by addition of new outlet and impact of ESOP grant.
— Surendra Agarwal
We are also mindful that this year is a little uncertain from a macro perspective, but we are also mindful of the fact that this is the time when great opportunities come.
— Sanjay Thakker
So while I understand that your -- I mean, our new vehicle sales is growing faster than the service business, and that's why the gross margin are under pressure.
— Sabyasachi Mukerji
There is a pressure on all retailers to clear the 2024 stock in December rather than having a calendar year shift.
— Sanjay Thakker
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Q&A — 10 exchanges
Q
So I just wanted to ask within the Mercedes-Benz segment, I wanted to understand that for the ultra-high-end models that you were speaking about earlier, which you said contributed to around 25% of the company's sales and the car price above INR1.5 crores, does Landmark enjoy a better margin for these cars?
Sanjay Thakker
Arnav, the margin percentage is more or less similar. So in absolute terms, we make more money. But in percentage terms, it is same. Okay, Thank You. And I also just wanted to get a bit of an understanding into the macroeconomic environment of EVs, so because I was reading some news that globally apparently POPs have recently announced that they will be scaling back on some of their EV plans, and they will be increasing their share of internal combustion engines instead. So I just wanted a bit of an insight into the environment, if you could just highlight the same? Yes. Arnav, this is a quest
Q
Hello, Good Morning to the team. Firstly, congratulations on the execution of both the strategies that is store expansion and on cost reduction. So my question was on this sort of raises hopes for us as investors for the forthcoming year. Do you have visibility for another 25 stores either in calendar year '25 or financial year '26?
Sanjay Thakker
Lokesh, no, I wouldn't want to go that way right now. As Aryaman said, we -- the focus right now is to get all the stores up and running that we have done and make them profitable. Having said that, the new OEMs, who we have partnered with, for example, Mahindra, I'm sure that neither we or them have kind of signed up for 2 cities for Landmark. But there is no number. And I would like to take this opportunity to kind of talk about why did we do nearly 25 stores in a year, which we had never done, though the execution of this gives me a huge amount of confidence in our team's ability. The thing
Q
Sir, I just want to understand gross margins on the stand-alone side has contracted by almost 800 bps year-on-year and 500 bps quarter-on-quarter. So just want to understand what's the reason behind that?
Sanjay Thakker
Yes, Devesh, sure. So this is an important question. And that is why our presentation, we tried to make it a little clear and also in Surendra's speech. What is happening is that in the new stores, which are -- and we have called it out in our slide, there are some 19, I think, outlets, which are classified under new 11 and 8, yes, it is 19. So now over there, the service contribution in the new outlets is as of now, half of our old outlets service contribution. Now you understand what I'm saying. The point is that the Mahindra, Kia workshops are in a ramp-up stage. In fact, in Kia, we haven't
Q
Sir, what will be the cash flow for 9 months?
Surendra Agarwal
The free cash generated... Operating cash flow. So operating cash flow is around... INR200 crores. INR200 crores. So this will include the inventory build-up considered in it. Yes, yes, change in working capital, yes. Is also considered, right? Right. Now post this so -- post this operating cash flow, how much capex did we do for these 23 stores? So 23 store, the capex would be around INR70 crores. And then we have some other capex also for the existing store and the vehicle purchase. So total capex for the 9 months is around INR125 crores. INR125 crores. Vehicle purchase means that that shoul
Q
Sir, just want to get some clarification. So the free cash flow of INR75 crores in 9 months is post capex, post rent, right, everything post.
Surendra Agarwal
Yes, post capex, yes. And rent also you have deducted, right? No, rent is the lease impact. So this is the Ind AS cash flow. So if you reduce the rent is for the period is another INR50 crores, you can reduce. That's the repayment of lease liability because this is as per the Ind AS accounting, I'm telling you. And as far as the actual cash post capex and rent is INR25 crores for 9 months, right? Yes. That's the figure. And fair to say that next year, the capex will be in the range of INR15 crores to INR25-odd crores, meaning substantial reduction in capex? I mean it's a little early to call t
Q
Sanjay, ji, 2 questions. Firstly, on the gross margins, and I'm delving it a little deeper. So while I understand that your -- I mean, our new vehicle sales is growing faster than the service business, and that's why the gross margin are under pressure. But trying to understand on, let's say, on a vehicle sales gross margin on a like-to-like basis, and I'm sure you must track it internally. Is there any change from the gross margin levels of the vehicle sales business internally that you see?
Sanjay Thakker
So it is also, Sabyasachi, a seasonality kind of an impact. In the last quarter, the discounts level go up for new cars, I'm talking about, where the 2024 cars are generally sold, a lot of discounts are given by the OEs and a lot of some discount is also goes from our pocket. So in the quest for reducing the stock, we had also let go and which we had reported in the previous quarter that we had let gone of some wholesale opportunities. And by virtue of that, we had let go of our margins on new cars. The OEs typically give margin on wholesales. So we had let go of that with the idea to reduce o
Q
Sanjay, sir, a few months back, there was an article of the MD, Mr. Santosh Iyer of Mercedes. He mentioned about the expansion plans, and he also mentioned during the interview that they are looking to also refurbish the existing outlets with the support of the dealers, and they are expecting a capex of about INR400 crores to INR500 crores. So if you have had any discussion with the Mercedes team on that issue or that topic? And if you can just share how the mechanism works, how do we get compensated if we invest in refurbishment? Or does that suppress our ROCE for the midterm? Something on th
Sanjay Thakker
Yes. So in our case, Lokesh, I think most of it has already happened. This is what is known as the MAR20, a new kind of a CI guidelines that they have come up with. And that has been happening. I think he is talking about a cumulative number that may have happened. In our case, that has already happened. The new outlets, which are happening like in a Patna or a Bhopal for us will have those kind of a thing. So there will be no change -- material change in what we have to do really over here. In our existing outlets as well, no major change required. No, no, no. Lokesh, they are all done over a
Q
A couple of questions. One, sir, how do we see the domestic EV market in terms of some guidance for the next 2, 3 years? And also...
Sanjay Thakker
Yes, go ahead, Khush. Also, same -- some industry perspective on the preowned markets. Do we expect as a percentage of our revenue also for this share to increase going ahead? And sir, lastly, can you also provide a share of business, if possible, from our top 5 customers? Like how much are we -- how much share do we have in India with them? What is the third question, if you can please repeat what share of what? So can you share the market share, the share of business that we have from our top 5 clients in India? Yes. It is there. This is a simple one, Khush. In our presentation, we are -- 1
Q
My question was more on the performance of other businesses other than Mercedes. So if you look at the subsidiaries, the PBT is nearly at breakeven levels right now. But that is also due to higher utilization of new cars business typically in Q3. And also, there has been a steady improvement in the profitability of the new stores that you have been adding. So keeping both those things in mind, how do you expect this profitability to move in Q4?
Sanjay Thakker
Yes. So Amar, we -- because of our structure and each of our director or a CEO is a brand director, everybody has a P&L to kind of meet. So in our system, anything, which does not make money is not kind of allowed over a period of time. We have -- I'll not talk about the new brands right now because they are in a ramp-up stage. As far as MG is concerned, we are now comfortable with the Windsor coming in. And we believe that we are -- we have gotten into a profitability zone. Honda has been profitable for us all the time. Volkswagen will be profitable. Renault Mumbai is now profitable because o
Q
Yes. Thank you, B&K team. I mean, it was a very insightful thing. We actually value these kind of conversations. It gives us a direction, the missing points in what we do or are not able to do. And thank you all the participants for positive comments and the feedback. See you next time. Thank you.
Management
Speaking time
Sanjay Thakker
42
Surendra Agarwal
18
Pritesh Chheda
17
Moderator
12
Bhargav
10
Amar Kant Gaur
6
Sabyasachi Mukerji
5
Lokesh Manik
4
Devesh Kayal
4
Khush Nahar
3
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Opening remarks
Akhil Parekh
Thank you. Hello, everyone. Good morning. On behalf of B&K Securities, I welcome you all for third quarter FY '25 earnings call for Landmark Cars. From the management, we have Mr. Sanjay Thakker, Promoter, Executive Chairman; Mr. Aryaman Thakker, Executive Director; and Mr. Surendra Agarwal, Chief Financial Officer. Without taking much time, I'll hand it over to Sanjay, sir for your opening remarks, post which we'll open the floor for Q&A session. Over to you, sir.
Sanjay Thakker
Thank you, Akhil, and thank you, B&K team, for hosting us. The results and the presentations are uploaded on the stock exchanges and the company website. I hope everybody had a chance to have a look at it. The global auto industry is going through quite an uncertain time currently. The change in guard in USA has resulted in environmental goals of many countries being reset. The threat of tariff has also made the situation more complex. The Indian auto market grew at 4% in volume and 9% in value terms in calendar year 2024 after a rapid growth in 2022 and '23. The October-December quarter, however, was positive one, showing much better growth than the previous quarters. In Q3 of financial year '25, we achieved significant growth in revenue on year-on-year, as well as Q-on-Q basis. In this quarter, we achieved the highest quarterly EBITDA, as well as the highest turnover that the company has seen. The highest EBITDA has been in the last 8 quarters. The solid foundation that we have built
Aryaman Thakker
Thank you. Our revenue and profitability saw significant growth this quarter, supported by a strong festive period, the operationalization of new outlets and the positive impact of recent car launches. In FY '25, 23 out of the 24 planned outlets have already started operations, including 7 facilities for Mahindra & Mahindra and Kia in Hyderabad, which became operational in November. We also acquired a Kia sales outlet in Hyderabad from a co-dealer in December. These stores will achieve scale and start contributing as expected over the next 3 quarters. Let me now give you a highlight of some of our partner OEMs. Mercedes-Benz has maintained its position as the number one luxury carmaker in India for 10 years in a row. They sold 19,565 vehicles in calendar year '24, which was an over 12% increase over '23. 25% of these sales came from top-end vehicles, which are cars priced over INR1.5 crores. They now have over 2 lakh cars sold in India since inception. Landmark continues to be the larg
Surendra Agarwal
Thank you, Aryaman. We consistently lead in volume contribution across various OEMs, bringing meaningful outcome to each partnership. Now I will brief you the performance for Q3 FY '25. We added and operationalized new outlets throughout the year that contribute to revenue growth. Our total pro forma revenue for the quarter is the highest ever, which stand at INR1,668 crores, as compared to INR1,301 crores in the same quarter of the previous year with a growth of 28% year-on-year. Our new vehicle pro forma sale was around INR1,421 crores vis-a-vis INR1,074 crores in Q3 FY '24 across all our OEM partners. Our aftersales revenue was INR247 crores against INR227 crores in Q3 FY '24. In Q3 FY '25, our preowned vehicle sales revenue stood at INR36.6 crores with a sequential growth of 32.1%. In the service business, new outlets are currently contributing half as much as existing one, impacting gross margin. However, service revenue is steady in new outlet increasing each month. And once thes
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