Landmark Cars - Consolidation to drive profitable growth - Company Update

Landmark Cars reported a strong Q4FY26 performance, with revenue and earnings beat our estimates. The company delivered its best-ever EBITDA and after-sales service margins, driven by improved utilisation of recently opened workshops, better asset sweating, operating leverage and disciplined cost control. After an aggressive expansion phase over the last 18 months, Landmark Cars has now entered a consolidation phase, with focus shifting towards improving outlet productivity, sweating existing assets and strengthening cash generation. The company’s diversified OEM portfolio continues to scale well, with newer brands such as MG, Mahindra, Kia and BYD emerging as meaningful growth contributors, while EVs now form a sizeable portion of new car sales. With rising ASPs, healthy demand across key OEMs, upcoming model launches and continued scale-up in the high-margin after-sales business, we believe Landmark Cars remains well placed to sustain profitable growth over the medium term. We maintain our BUY rating on the stock with a revised target price of Rs 700.

Healthy growth across both new car sales and after-sales

Revenue grew 17.2% YoY to Rs 12,785mn (MNCL Est- Rs 12,556mn), driven by healthy traction across both new car sales and after-sales service. New car sales (~78% of revenue) grew 18% YoY to Rs 9,960mn, supported by healthy demand across key OEMs, higher ASPs and continued premiumization. After-sales service revenue grew 15% YoY to Rs 2,830mn, aided by improved utilization of recently opened workshops and steady increase in average revenue per vehicle serviced. The company’s diversified OEM portfolio, rising contribution from newer brands and continued scale-up in the high-margin after-sales business remain key revenue growth drivers.

Operating leverage and cost control drove earnings

Landmark Cars reported gross margin of 16.4%, down 27bps YoY, though it improved by 39bps QoQ. Despite lower gross margin, OPM expanded by 91bps YoY to 5.9%, led by strong cost control, with employee cost declining 52bps YoY and other expenses declining 21bps YoY. Segmental profitability also improved sharply, with new car sales margin expanding by 81bps YoY to 2.0%, while after-sales service margin expanded by 167bps YoY to 20.1%, the best ever reported by the company. EBITDA grew 38.5% YoY to Rs 757mn, driven by strong operating performance and better operating leverage. PAT stood at Rs 150mn versus Rs 18mn in Q4FY25, aided by higher EBITDA, lower interest cost (-6.6% YoY) and lower tax rate of 27.4% versus 56.5% in the base quarter.

Outlook:

Landmark Cars has now entered a consolidation phase after a period of aggressive network expansion, with focus shifting towards optimising existing assets, improving outlet productivity and driving stronger cash generation. The company’s recently added outlets and workshops are stabilising well, which should support operating leverage over the coming quarters. Further, newer OEMs such as MG, Mahindra, Kia and BYD are emerging as meaningful growth contributors, while EVs already account for 21% of new car sales on a proforma revenue basis. Importantly, Landmark Cars does not see EV penetration as a major risk to its after-sales business, as accident repair, tyres, brakes, value-added services and body-shop work continue to remain relevant, with EV accident repair costs potentially higher due to battery and component replacement. With rising ASPs, a strong upcoming model launch pipeline across Mercedes-Benz, Kia, Renault, Honda and MG, and continued scale-up in the high-margin after-sales business, we expect Landmark Cars to sustain healthy growth momentum and improve profitability over the medium term.

Valuation, view and Risk:

Q4FY26 performance was ahead of our estimates, driven by better-than-expected performance across both new car sales and after-sales service. While we largely maintain our revenue estimates, we trim our EBITDA estimates by 3.6%/3.7% each for FY27E/FY28E, which in turn lowers our PAT estimates by 7.4%/1.6% for FY27E/FY28E, respectively, factoring in lower-than-anticipated gross margins and potential increase in overall cost structure. We now expect the company to deliver Revenue/EBITDA/PAT CAGR of 16.3%/25.5%/86.2% over FY26–28E. Further, we lower our target multiple to 22x from 25x, given the earnings cut and relatively slower margin recovery. We value the stock at 22x FY28E EPS, arriving at a revised target price of Rs 700.  Considering recent fall in the stock price and attractive valuation at CMP we maintain our BUY rating on the stock. Key risks: slower-than-expected ramp-up in new outlets and slowdown in the auto sector.

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. - 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.

1. What were Landmark Cars' Q4FY26 highlights?

Landmark Cars reported 17.2% YoY revenue growth to Rs 12.8 billion and EBITDA growth of 38.5% YoY, supported by strong vehicle sales, record after-sales margins and operating leverage.

2. Why is Landmark Cars viewed positively?

The company is benefiting from improving outlet productivity, a growing contribution from premium and EV brands, strong after-sales expansion and enhanced cost efficiencies.

3. How important is the after-sales business?

After-sales remains a key profitability driver, with margins expanding to 20.1% in Q4FY26. Higher workshop utilization and recurring service revenues support long-term earnings growth.

4. What role do EVs play in Landmark Cars’ strategy?

EVs contribute over 20% of new vehicle sales on a proforma basis. Management believes EV adoption will continue supporting growth while maintaining after-sales opportunities through repairs, body-shop services and value-added offerings.

5. What is the target price for Landmark Cars?

The research report maintains a BUY rating with a target price of Rs 700, supported by improving profitability, strong OEM partnerships and attractive valuations.

6. What are the key risks?

Key risks include slower-than-expected ramp-up of new outlets, weaker automobile demand and delays in realizing operating leverage benefits.

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