Comments: 0 | Likes: 0 | Current Price: ₹ 634.45
Landmark Cars Limited
Landmark Cars Limited
About The Company
Incorporated in 1998, Landmark Cars Limited is the leading premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault. The company also cater to the commercial vehicle retail business of Ashok Leyland in India.
Landmark Cars offers services such as 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.
The company has expanded the network to include 112 outlets in 8 Indian states, comprised of 61 sales showrooms and outlets and 51 after-sales services and spare outlets, as of September 30, 2021.
Landmark Cars Limited vehicle dealership network is spread across 31 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.
The company operate as an authorized service centre for Mercedes-Benz, Honda, Volkswagen, Jeep, Renault and Ashok Leyland. Landmark Cars also provide after-sales service and repairs through 51 after-sales services and spare outlets, as of September 30, 2021.
The company's business model captures the entire customer value chain including retailing new vehicles, servicing and repairing vehicles, selling spare parts, lubricants and other products, selling pre-owned passenger vehicles and distribution of third-party finance and insurance products.
Business Overview
The company is a leading premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault. The company also have a commercial dealship with Ashok Leyland in India. They have 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 financial and insurance products. The company started their operations and opened their first dealership for Honda in CY1998, and the company have expanded their network to include 112 outlets in 8 Indian states and union territories, comprised of 59 sales showrooms and outlets and 53 after-sales service and spares outlets, as of June 30, 2022. The company are focused on the premium and luxury automotive segments. CRISIL Research expects the premium segment to grow at a CAGR of 10-12% CAGR from Fiscal 2022 to Fiscal 2027, while the luxury segment is expected to grow at a CAGR of 14-16% during the same period. (Source: CRISIL Report, September 2022). They were the number one dealer in India for Mercedes in terms of retail sales for Fiscal 2022, number one dealer in India for Honda and Jeep in terms of wholesale sales for Fiscal 2022 and were the top contributor to Volkswagen retail sales for calendar year 2021. In addition, they were the third largest dealership in India for Renault in terms of wholesale sales contribution for calendar year 2021.
New Vehicle Sales
In the three months ended June 30, 2022 and in Fiscal 2022, we sold 5,398* and 19,264* new vehicles, respectively, including new passenger vehicles of Mercedes-Benz, Honda, Volkswagen, Jeep and Renault and new commercial vehicles of Ashok Leyland. Our consolidated revenue from new vehicle sales were ₹5,869.07^ million and ₹22,763.53^ million, respectively, in the three months ended June 30, 2022 and in Fiscal 2022, and comprised 73.34% and 76.48%, respectively, of our consolidated total revenue from operations in those periods.
* Including cars sold under agency model introduced by Mercedes-Benz with effect from October 1, 2021.
^ Excluding commission income of ₹ 194.34 million and ₹ 310.61 million for the three months period ended June 30, 2022 and for the year ended March 31, 2022 respectively under agency model introduced by Mercedes-Benz with effect from October 1, 2021.
The following table sets forth (i) the volume of new vehicles that we sold for each OEM in the three months ended June 30, 2022 and in Fiscal 2022, (ii) the year we opened our first dealership with each particular OEM (iii) our market position and (iv) percentage of passenger vehicles sold with respect to that OEM in 2021 or Fiscal 2022.
The company vehicle dealership network is 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. These states and union territories constituted approximately 51% of Indian vehicle demand in Fiscal 2022. In addition, we have an online presence through our website for Group Landmark, websites for our individual dealerships and the websites of our OEMs to showcase our brands including the latest model launches by our OEM partners and to facilitate lead generation. We began taking bookings online through our website for Group Landmark in June 2021 which is leading to monthly sales each month.
Expansion into Pure EV Sales
The company have executed a letter of intent with the automaker BYD, a leading player in the global EV market, for them to be their dealer in the National Capital Region (Delhi) and Mumbai in respect of their electric passenger vehicles.
After-Sales Service and Spare Parts
The company after-sales service and spare parts offerings at each of our dealerships comprise repair and collision repair services and include both warranty work, insurance claim work and customer paid services. The company operate as authorized service centers for Mercedes-Benz, Honda, Volkswagen, Jeep, Renault and Ashok Leyland, and we provide after-sales service and repairs through 53 after-sales service and spares outlets, as of June 30, 2022. During the three months ended June 30, 2022 and Fiscal 2022, Fiscal 2021 and Fiscal 2020, we serviced 72,521, 268,459, 213,755^ and 280,952^ passenger vehicles, respectively, and 3,948, 10,619, 7,713 and 10,088 commercial vehicles, respectively. In the three months ended June 30, 2022, Fiscal 2022, Fiscal 2021 and Fiscal 2020, our after-sales service and spare parts revenues was ₹1,648.60 million, ₹5,869.01 million, ₹4,229.56 million and ₹4,806.40 million, respectively. In addition, as authorized dealers for Mercedes-Benz, Honda, Volkswagen, Jeep, Renault and Ashok Leyland, we also sell spare parts, lubricants, accessories and other products at our after-sales service and spares outlets. In the three months ended June 30, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, The company earned an average of ₹21,559, ₹21,030, ₹19,098 and ₹16,515, respectively, from each vehicle serviced, and they serviced an average of 14, 14, 17 and 17 vehicles for every new vehicle sold in the respective periods.
Pre-owned Passenger Vehicle Sales
The company buy and sell pre-owned passenger vehicles at each of our dealerships. They operate on two business models: (1) they facilitate the sale of used vehicles through our appointed panel of agents on a commission basis; and (2) they also take the vehicles on our books for sale after any needed refurbishment. The company also receive an incentive from our OEMs for used vehicles traded in for new vehicles; this incentive or over-allowance is available to us as a new car dealer and helps us with closing these transactions. We have also implemented a digital SaaS platform developed by Sheerdrive, an auto technology start-up company in which we held a 19.97% equity interest (as at June 30, 2022), in our pre-owned car business. Sheerdrive’s technology platform enables digital evaluation and real time used car prices, which we believe will help drive transparency, accuracy and velocity of used car transactions, and will help drive our strategy of combining our physical presence with digital scale and speed.
Third-party financial and insurance products
As a value add-on to our passenger vehicle sales, we facilitate the sale of third-party financial products including insurance policies and vehicle finance through our dealerships. Each of our dealerships offer finance and insurance from our recommended financial service providers, banks and insurance companies with which we have commission arrangements. We typically receive a portion of the cost of the financing paid or sum assured by the customer for each transaction as a fee from the finance or insurance provider. We believe that increasing the penetration of finance and insurance product sales will further drive profitability of our overall business.
Key Financial Performance
Strength of the company
Leading automotive dealership for major OEMs with a strong focus on high growth segments
The company are a leading premium automotive retail business in India with India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault. (Source: CRISIL Report, September 2022). The company started their operations and opened their first dealership for Honda in 1998, and they have expanded their network to include 112 outlets in 8 Indian states and union territories, comprising 59 sales outlets and 53 after-sales service and spares outlets, as of June 30, 2022. The cpmpany were the number one dealer in India for Mercedes in terms of retail sales for Fiscal 2022, number one dealer in India for Honda and Jeep in terms of wholesale sales for Fiscal 2022 and were the top contributor to Volkswagen retail sales for calendar year 2021. The company were the third largest dealership in India for Renault in terms of wholesale sales contribution for calendar year 2021.
The company have been honoured with awards and recognitions by our OEM dealership partners including, for example, “Most trusted automotive dealership” award at ET Leadership Excellence Awards, North 2022; “India’s largest automobile dealership in the luxury and premium cars categories” award at ET Leadership Excellence Awards, North 2022; “Most trusted JEEP dealership” award at ET Leadership Excellence Awards, North 2022; Rank 3 in Best Volume Contribution by Renault in 2021, Most Innovative Marketing – Dealer Award by Volkswagen in 2019, HR Partner of the Year by Mercedes-Benz in 2013 and Sales Satisfaction Award by Honda in 2015.
Growing presence in after-sales segment leading predictable growth in revenues and superior margins
The company services and repair offerings at each of their dealerships comprise repair and collision repair services and include warranty work, insurance claim work and customer paid services. The company operate as authorized service centers for MercedesBenz, Honda, Volkswagen, Jeep, Renault and Ashok Leyland, and we provide after-sales service and repairs through our 53 after-sales service and outlets across eight Indian states and union territories. We also sell spare parts, lubricants, accessories and other products from these outlets.
The company after-sales service and spares business provides a stable revenue stream and contributes to higher-margin revenues at each of Their dealerships, which helps mitigate the cyclicality that has historically impacted some players of the automotive sector. Their after-sales service and spares revenue contributed to 20.60%, 19.72%, 21.62% and 21.66% of their revenue from operations and our after-sales service and spare parts EBITDA contributed to 58.49%, 57.95%, 64.23%, and 104.07% of Their EBITDA during the three months ended June 30, 2022 and Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. In the three months ended June 30, 2022 and Fiscal 2022, Fiscal 2021 and Fiscal 2020, our EBITDA margins from our after-sales service and spares business were 18.16%, 18.19%, 17.75% and 17.91%, respectively.
Comprehensive business model capturing entire customer value-chain
The business caters to the entire customer value-chain including retailing new vehicles, servicing and repairing vehicles, selling spare parts, lubricants and other products, selling pre-owned passenger vehicles and the distribution of third party financial and insurance products. The company benefit from the synergies of these complementary businesses as well as increased customer retention from servicing their customer’s various automotive needs. As the number one dealer in India for Mercedes-Benz in terms of retail sales for Fiscal 2022, number one dealer in India for Honda and Jeep in terms of wholesale sales for Fiscal 2022, were the top contributor to Volkswagen retail sales for calendar year 2021 and the third largest dealership in India for Renault in calendar year 2021, there is ample opportunity for new business in other segments by utilizing our synergies in complementary businesses. For example, each sale of a new or pre-owned passenger vehicle provides us the opportunity to sell the customer an extended service contract or a financial product such as vehicle financing and insurance. Customers who purchase vehicles from us also entrust us with the servicing and repairs of their vehicles at our dealership’s authorized service centers through products such as extended warranties. The company believe that they have an opportunity to grow the number of extended warranties sold during the next few years through the efforts of our service marketing team. Our service centers are also points of sale for spare parts, lubricants and other products such as accessories as well as value added services such as interior cleaning, polishing and sales of extended warranties. Further, our service centers act as points of renewal for insurance policies and extended warranties from end of manufacturer warranty period onwards. Their service centers also help to ensure customer retention within our network as OEMs require vehicles under warranty to be serviced at authorized service centers. Further, we also use our service centers to source pre-owned passenger vehicle opportunities for which we have sales teams stationed at our larger service centers.
Experienced Promoter and professional management team with technical expertise
The experience and diversity of our directors, management team and their Promoter have enabled them Company to be recognized as a customer centric, process driven organization with leading positions each of our OEM partners. The Promoter and Chairman, Sanjay Karsandas Thakker, laid the foundation for our Company’s business in 1998 by launching our first dealership for Honda in Ahmedabad. Our Promoter built our business by focusing on developing a strong team of dedicated and qualified professionals to lead our Company to its industry leadership positions with our OEM partners. Mr. Thakker is supported by a team of experienced directors including Paras Somani, Executive WholeTime Director, Aryaman Sanjay Thakker, Executive Director, and Mr. Akshay Tanna, a nominee Director of TPG. The majority of our management team have spent more than 10 years with our Company and bring capabilities to enable us to understand and anticipate automotive market trends, manage our business operations and growth, leverage our OEM relationships and respond to changes in consumer preferences in a rapidly changing environment. We will continue to leverage on the experience of our management team and their understanding of the Indian automotive industry in order to take advantage of current and future market opportunities. For more information, see the sections entitled “Our Promoter and Promoter Group” and “Our Management” beginning on pages 254 and 236, respectively.
Company's Strategies
Company's Business Operation
Corporate Structure
Landmark Cars Limited is the parent holding company and is an authorized dealer for Mercedes-Benz. Landmark Cars Limited owns 100% of the share capital of our subsidiaries Landmark Automobiles Private Limited (holding our Honda dealership), Benchmark Motors Private Limited (holding our Renault dealership), Landmark Lifestyle Cars Private Limited (holding our Jeep dealership, Automark Motors Private Limited (holding our Volkswagen dealership), Landmark Commercial Vehicles Private Limited (holding our Ashok Leyland dealership) and Watermark Cars Private Limited (holding our accessories business,shared service centers); Motorone India Private Limited (formerly known as Landmark Pre-owned Cars Private Limited) (with effect from June 16, 2022) and 83% of the share capital of our subsidiary Landmark Cars (East) Private Limited (holding our Mercedes-Benz Kolkata dealership). MotorOne India Private Limited has entered into distribution agreement with Smart Origins Pty Ltd. for distribution of automobile care product and accessories under the brand name of MotorOne. The following chart shows our corporate structure as of June 30, 2022.
The following table sets forth our outlets by OEM and by type as of June 30, 2022.
Industry Overview
Automobile finance rates and loan disbursements
According to the CRISIL Report, yields in the auto finance segment in India were declining over the past two to three years, due to softening of retail inflation and a fall in G-sec yields. With the implementation of the marginal cost of fundsbased lending rate (MCLR) regime from April 1, 2016, auto finance rates have remained subdued, as banks have been forced to pass on benefits of softer interest rate to end-consumers. This has brought yields down 100-130 bps since Fiscal 2015. However, since the RBI started increasing the repo rate in May 2022, interest rates are on the rise. The average finance rate for two-wheelers and passenger vehicles increased by 135 bps and 94 bps from May 2022 to August 2022, respectively.
Review of the Indian passenger vehicle (PV) industry
Market Segments
The Indian passenger vehicle industry can be broadly classified into three main segments, namely, mass market vehicles, premium vehicles and luxury vehicles.
Mass market vehicles segment mainly comprises of basic vehicles which are most economically friendly and preferred by the mass market in India. The mass market vehicles segment comprises of micro, mini, lower compact and vans segments. The share of mass market vehicles segment in the overall PV industry in India has decreased as a result of increasing disposable income, customer preference shifting towards premium vehicles and more frequent launches of new models in the premium vehicles segment.
Premium vehicles are costlier vehicles typically preferred by upper middle class and rich class. It comprises of upper compact, super compact, executive, premium and utility vehicles. This segment is getting more and more traction with increasing disposable incomes, higher launches and shifting customer preferences from mass market to premium vehicles. Luxury vehicles segment is a niche segment offering high end vehicles at high premium prices, mainly preferred by highnet-worth individuals and organisations. Vehicles of Mercedes, BMW, Audi, Volvo and JLR are part of this segment. The share of ultraluxury market comprising of brands like Ferrari, Lamborghini, Bugatti, Rolls Royce is insignificant in India.
Historical sales of the mass and premium segments
According to the CRISIL Report, the Indian PV (mass and premium segments) industry, in terms of sales volume, grew by a CAGR of 5.3% between Fiscal 2017 and Fiscal 2019, primarily due to increase in demand driven by improved economics, higher affordability and launches of new automobile modes. The industry, in terms of sales volume, contracted in Fiscal 2020 and Fiscal 2021, mainly due to mandatory implementation of BSVI norms, national lockdown, economic uncertainty and struggling vehicle supply. As the COVID-19 pandemic eases and economic sentiment improved, sales volume of the Indian PV (mass and premium segment) industry increased by a year-on growth of 13% in Fiscal 2022.
Competitive landscape of the key brands in the PV (mass and premium segments) industry
According to the CRISIL Report, the key original equipment manufacturers (OEMs) or brands in the Indian PV (mass and premium markets) include MSIL, Hyundai, Tata, M&M, Honda, Renault, VW and Fiat (Jeep). The following graph sets out the market share of each key brand in the Indian PV (mass and premium markets), in terms of value, for the years indicated:
Management Of The Company
Mr. Sanjay Thakker is our Chairman & Founder. He was born in the year 1965 and has done his graduation in commerce from Sydenham College, Mumbai. He comes from a respectable business family and his family business comprised of international trading of grains, shipping, textile mills and real estate development since the year 1930.
Financial Information
Balance Sheet
Cash Flow
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
Source - Company's RHP Filing and Website. Disc - This is not an recommendation of any and hence kindly consult your own advisors for the same.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
Articles
Comments
