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Landmark Cars stock jumps 6% as B&K Sec initiates coverage, 60% upside seen
The brokerage initiated coverage on Landmark Cars with a 'Buy' rating and a target price of ₹820 per share, implying a 60 per cent upside from Friday's closing levels.
At 3 PM, the stock was trading at ₹531, up 4.5 per cent from its previous day's close of ₹507.85. In comparison, the benchmark NSE Nifty50 was trading lower by 73.55 points or 0.3 per cent at 25,080.3 levels.
According to analysts at B& Securities, while Landmark Cars' proforma and reported revenues grew at a compound annual growth rate (CAGR) of 11 per cent and 9 per cent, respectively, from FY23 to FY25, the company's Ebitda, PBT, and PAT declined by 3 per cent, 20 per cent, and 55 per cent, respectively.
However, the company's sales growth of 11 per cent was double the Indian passenger vehicle sales CAGR of 5 per cent over FY23 to FY25.
During FY25, the older outlets and workshops contributed ₹70 crore to PBT, and the newly opened ones incurred PBT-level losses of ₹40 crore. As these facilities ramp up, they are expected to break even starting Q1FY26, with most turning profitable by the end of FY26, the brokerage said.
The company has also tied up with three new brands - Mahindra & Mahindra (M&M), Kia and MG Motors - over the past two years.
Landmark Cars is the first multi-brand, multi-location auto dealer operating in the premium and luxury car segment in India with 70 showrooms and 61 workshops as of FY25.
"While the after-sales mix for old brands is 17 per cent for the new brands, it is 9 per cent. As the after-sales mix improves for these new brands and new outlets scale up, we expect the margin of the company to improve from 5.5 per cent to 7.5 per cent over FY25-27E," B&K Securities said.
Analysts at B&K Securities believe that Landmark Cars remains a highly moated business with pan-India reach, high switching costs for OEMs, and market leadership with many OEMs, including Mercedes Benz, BYD, Jeep, Volkswagen, Honda and MG Motors. While the high capital requirements prevent smaller players from entering this segment, the intricate nature of the business is driving consolidation in the industry.
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