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Shares of Landmark Cars sprinted 9.3 per cent to Rs 785.75 apiece on the BSE in Friday's intraday trade after the company announced that it has received a Letter of Intent from MG Motor India Pvt Ltd for opening a dealership in Ujjain, Madhya Pradesh.
This dealership, the company said in an exchange filing, will be established by Aeromark Cars Private Limited, a wholly-owned subsidiary company of Landmark Cars.
At 10:50 AM, the stock of the auto dealer was ruling 7.2 per cent higher at Rs 770.4 per share as against 0.9 per cent gain in the benchmark S&P BSE Sensex. That said, the stock has underperformed the market over the past one month, falling 12 per cent during the period. By comparison, the benchmark Sensex gained 1.2 per cent during the period
MG Motors' dealership will include sales and after-sales of MG Cars. After Indore and Bhopal, this is Landmark's third MG dealership in the state of Madhya Pradesh.
"This new dealership aligns with Landmark's goal of ongoing expansion by penetrating further across geographies as well as OEMs. Landmark has signed six dealership agreements with MG Motor in a brief time period. Currently, Landmark Cars is present in nine states of India," it said in a statement.
Landmark Cars Limited is the leading premium automotive retail business in India with dealerships for MercedesBenz, Honda, Jeep, Volkswagen, BYD, Renault, Mahindra & Mahindra and MG Motors. The company also caters to the commercial vehicle retail business of Ashok Leyland in India.
Financially, the company's revenue stood at Rs 960 crore at the end of the December quarter of FY24 (Q3FY24), clocking a rise of 9.5 per cent from Rs 880 crore in Q3FY23.
Ebitda margins stood at 6.8 per cent, noting a decline from 7.4 per cent in Q3FY23. This was due to the upfront costs incurred in the quarter for the upcoming new outlets. Additionally the company liquidated some inventory at lower cost foregoing margins and repaid debt.
Revenue for the first nine months of FY24 (9MFY24) stood at Rs 2,420 crore, down 4.1 per cent from Rs 2,530 crore in 9MFY23. Margins were flattish at 6.8 per cent compared to 7 per cent last year.
"Dealers like Landmark are well placed to take advantage of the price increase in auto sapce but in the quarter gone by they have seen supply issues. To counter this, the company has been expanding their presence by opening outlets with the newer brands. The management sees their next leg of growth coming from the 3Ms – Mercedes, MG Motors, and M&M benefiting from their TEV and EV portfolio," said analysts at Phillip Capital in their result review report.
Landmark Cars has a pipeline for 10 new outlets to be opened in the next 4-5 months for which they incurred costs upfront. Besides, in 9MFY24, the company sold 641 pre-owned cars under the brands they represent, accounting for Rs 67.1 crore, 2 per cent of proforma revenue versus 1 per cent last year.
The company is on track to cross Rs 100 crore this year and maintain their guidance of doubling it next year aided by its separate new branding (Landmark Select) and increased advertisements.
With more organic and inorganic opportunities in the pipeline, the brokerage expects a CAGR growth of 15 per cent / 19 per cent / 33 per cent in Sales / Ebitda / PAT, respectively, for FY23-26 period. It has a 'BUY' rating with a target price of Rs 965.
