Landmark Cars - Growth intact; After-sales ramp-up to drive the next leg | Q1FY27 Company Update

Landmark Cars delivered a strong Q1FY27 performance, with revenue ahead of our estimates. Though gross margins contracted to an all-time low, the company continued to demonstrate strong operating discipline, with lower employee and other expenses absorbing a large part of the gross margin pressure and limiting the decline in operating margins. The company’s newer OEMs continue to scale rapidly, contributing ~38% of new vehicle sales but only ~19% of after-sales revenue, thereby providing significant headroom for the higher-margin after-sales business as the installed base matures and workshop capacity expands. Encouragingly, EVs, which now form a meaningful share of Landmark’s vehicle sales, are witnessing after-sales revenue and margins broadly comparable to ICE vehicles, alleviating concerns around dilution in service economics. With healthy demand, improving new vehicle profitability, rising ASPs, further scope for cost efficiencies and strong cash generation supporting debt reduction, we believe Landmark Cars remains well placed to deliver sustained profitable growth over the medium term. We maintain our BUY rating on the stock with a revised target price of Rs 735.

Landmark Cars Ltd. Stock Price Chart

Revenue growth remains strong, led by new car sales

Landmark Cars reported robust revenue growth of 22.7% YoY to Rs 13,024mn (MNCL Est- Rs 11,808mn), driven by healthy growth across both new car sales and after-sales. Revenue from new car sales grew 25% YoY to Rs 10,353mn, supported by a 16.9% increase in volumes to 4,610 vehicles and 7.1% growth in ASP to Rs 2.25mn, aided by price hikes and improving product mix across OEMs, while EVs now account for ~30% of vehicle sales by value. After-sales revenue grew 12% YoY to Rs 2,670mn, supported by a 4.8% increase in vehicles serviced to 98,281 and 8.6% growth in ASP to Rs 27,172. New car sales contributed ~79.5% of revenue, while after-sales contributed ~20.5%. The continued scale-up of newer OEMs, healthy demand across key brands and improving workshop utilization should support revenue growth going forward.

Gross margin pressure persists

Gross margins contracted by 140bps YoY to 15.5% (MNCL Est- 16.5%), the lowest level reported by the company, largely reflecting the changing OEM mix and lower after-sales contribution from newer brands. However, disciplined cost control helped cushion the impact, with employee expenses declining 66bps YoY and other expenses declining 53bps YoY, limiting the contraction in OPM to just 20bps YoY to 5.5%. EBITDA grew 18% YoY to Rs 720mn, supported by robust topline growth, while PAT increased 98% YoY to Rs 145mn (MNCL Est- Rs 122mn). Segmentally, new car EBITDA margins stood at 2.3% flat YoY, while after-sales EBITDA margins improved to 18.4% (+20bps YoY). The company is expanding service capacity across high-growth OEMs, which should improve utilization and increase the contribution of the higher-margin after-sales business.

Outlook

We remain constructive on Landmark Cars’ medium-term outlook, supported by healthy demand across key OEMs, rising ASPs, continued scale-up of newer brands and increasing EV penetration. Importantly, newer/high-growth OEMs contribute ~38% of new vehicle sales but only ~19% of after-sales revenue, as their installed base and service operations remain in the ramp-up phase, providing meaningful headroom as vehicles mature into regular service cycles and workshop capacity expands. EVs, which now account for ~30% of vehicle sales by value, are also witnessing after-sales economics broadly comparable to ICE vehicles, alleviating concerns around structural dilution in service profitability. We largely maintain our FY27E/FY28E revenue estimates; however, we reduce our margin assumptions by 50bps/40bps, factoring in the sustained pressure on gross margins from a higher contribution of newer OEMs, where after-sales mix remains lower during the ramp-up phase. This leads to an 8%/5% reduction in EBITDA estimates and a 10.7%/1.2% cut in PAT estimates, respectively. We roll forward our valuation to Q1FY29E and value the stock at 22x Q1FY29E EPS, arriving at a revised target price of Rs 735.

Valuation, view and Risk

We expect Landmark Cars to deliver Revenue/EBITDA/PAT CAGR of ~16%/20%/66% over FY26–FY29E, supported by healthy demand, improving asset utilization and scale-up of the higher-margin after-sales business. We continue to value the stock at 22x Q1FY29E EPS and arrive at a TP of Rs 735, maintaining our BUY rating. Key risks include weaker auto demand, sustained gross margin pressure and slower ramp-up of newer OEMs.

Company website: https://www.grouplandmark.in/

*CMP is as per report published date

Click to download the full Landmark Cars Ltd Company Update

Analyst:

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Vaidik Bafna- Research Associate, Institutional Equities (NISM-202100035711)

Landmark Cars Ltd. Q1FY27 - Frequently Asked Questions (FAQ)

Here are quick answers to common investor questions on the Landmark Cars Ltd investment opportunity, including levels, outlook and risk factors.

How did Landmark Cars perform in Q1FY27?

Landmark Cars reported 22.7% YoY revenue growth to ₹13.02 billion. New vehicle sales increased 25%, while after-sales revenue grew 12% during the quarter.

What is driving Landmark Cars' revenue growth?

Growth is being supported by higher new vehicle volumes, rising average selling prices, newer OEMs, improving product mix and continued demand across key automotive brands.

Why is after-sales important for Landmark Cars?

After-sales generally provides higher margins than new vehicle sales. Newer OEMs currently contribute a larger share of vehicle sales than after-sales revenue, creating potential for service revenue growth as their installed base matures.

How significant are EVs for Landmark Cars?

EVs accounted for approximately 30% of vehicle sales by value in Q1FY27. The supplied research indicates that EV after-sales economics were broadly comparable with ICE vehicles during the period.

What happened to Landmark Cars' margins?

Gross margin declined 140 basis points YoY to 15.5%, mainly due to the changing OEM mix and lower after-sales contribution from newer brands. Cost control limited the decline in operating margin to 20 basis points.

What is the Landmark Cars target price?

The supplied research maintains a BUY rating and assigns a target price of ₹735 versus the reported CMP of ₹547. This is an analyst estimate and does not guarantee future returns.

What are the key risks for Landmark Cars?

Key risks include weaker automotive demand, sustained gross-margin pressure and slower-than-expected ramp-up of newer OEMs and their after-sales operations.

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