Landmark Cars IPO: All You Need To Know
Landmark Cars IPO will launch on Dec. 13 at a price band of Rs 481-506 apiece.
TPG-backed Landmark Cars Ltd., the country's leading premium car dealer, will launch its initial public offering between Dec. 13 and Dec. 15.
The issue consists of a fresh issue of Rs 150 crore and an offer-for-sale of Rs 402 crore by selling shareholders at a price band of Rs 481-506 apiece in the IPO. The issue is worth Rs 552 crore. The promoters and the promoter group will hold 48% of the post-offer issued and paid-up equity share capital. The offer for sale comprises 27.56% of the post-offer equity capital in the IPO.
IPO Details
Duration: Dec. 13 to Dec. 15
Fresh Issue: Rs 150 crore
Offer for sale: 79.44 lakh shares.
Price band: Rs 481-506 per share.
Issue size: Offer for sale of Rs 552 crore.
Face value: Rs 10 apiece.
Lot size: 29 shares and multiples.
Listing on: BSE and NSE.
Lead managers: Axis Capital, ICICI Securities
Use of Proceeds
The Rs 120 crore raised from the IPO will be utilised to reduce working capital loans.
Business
The company is a leading premium automotive retail dealer in India, with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen, and Renault. It also has a commercial vehicle dealership with Ashok Leyland in India. The company moved from a dealership model to an agency model for Mercedes Benz cars in October 2021 and earns commissions on the sale of the vehicles. This has also helped reduce its working capital requirement.
It has a presence across the automotive retail value chain, including sales of new vehicles, after-sales service and repairs (including sales of spare parts, lubricants and accessories), sales of pre-owned passenger vehicles, and facilitation of the sales of third-party finance and insurance products.
It began operations in 1998 and now has 112 outlets in eight states and union territories, comprising 59 sales showrooms and outlets and 53 after-sales services and spare outlets as of June 30, 2022.
It has a vehicle dealership network spread across 32 cities in eight states and union territories, including Maharashtra, Uttar Pradesh, Gujarat, Haryana, Madhya Pradesh, Punjab, West Bengal, and the National Capital Territory of Delhi. In FY22, nearly 51% of all domestic vehicle demands were made in these states and union territories.
It has formed a partnership with BYD to sell electric passenger vehicles in the NCR and Mumbai.
Its revenue consists of revenue from sales of cars at the showroom and after-sales services. The margins for showroom sales are around 3.5%, while those for after-sales services are at around 18%.
It has entered the pre-owned car sales segment, which is currently in a nascent stage.
Financials
The company is profitable, with blended Ebitda margins of 6.4% in the first half of FY22. The business requires the company to maintain up to 40 days of inventory worth around Rs 300 crore, which is primarily funded through working capital loans and supplier credit.
Peer Competition
The domestic market is highly competitive with a lot of players, but there is no listed car dealership in the country.
Risk Factors
The company is subjected to the significant influence of, and restrictions imposed by, OEMs pursuant to the terms of dealership or agency agreements that may adversely impact business.
The agreements governing indebtedness contain certain restrictive covenants, and the inability to comply with these covenants could adversely affect business.
Success depends on how well OEMs' vehicle brands are perceived, how well they are marketed, and how competitive they are overall in India. Any damage to these brands or failure to compete well in India could hurt business in a big way..
A large portion of business operations are concentrated in the states of Gujarat and Maharashtra, and any adverse developments in these states could have an adverse effect on business.
It may not be able to complete or achieve the expected benefits from, current or future dealership acquisitions, which could materially adversely affect business
The decision by any of its OEMs not to renew, terminate, or require adverse material modifications to any of its dealership or agency agreements entered into with them could have a material and adverse effect on business.
Its investments in building a pre-owned vehicle business and establishing a new electric passenger dealership with BYD and building an electric vehicle business may not be successful due to insufficient demand in India for electric vehicles and may be loss-making.