Landmark Cars Ltd

Q2 FY23 Earnings Call Analysis

Management growth scorecard

Fundraise

N/A

Capex

Yes

Revenue

Category 3

Margin

Category 3

Order

Yes

2 of 4 growth signals are positive.

Fundraise plans

→There is no mention of any current plans to raise funds through debt or equity in the provided transcript.
→Sanjay Thakker mentioned that they do not intend to become an NBFC themselves currently.
→The company is focusing on profitable, high ROCE growth and maintaining a disciplined cost structure.
→Financial support discussions are noted with Renault during a difficult phase, but not as a fundraising.
→Overall, no explicit plans for new fundraising through debt or equity were disclosed in the call.

Yes

→There is mention of an exceptional item related to CAPEX write-off for shifting the Jeep small workshop to a larger workshop in Jeep Delhi (Page 6).
→Discussions around expansion with Volkswagen include waiting for developments with Indian partners for growth and more locations, indicating potential future investment in new outlets (Page 8).
→No specific new large-scale capex or strategic manufacturing plant investments were detailed; for example, regarding BYD, establishing a manufacturing plant in India is uncertain and no definite plans were shared (Page 11).
→The company emphasizes profitable, high ROCE growth, implying any future investments would be carefully considered to maintain profitability (Page 13).
→Pre-owned business expansion is planned but mainly focused on business model development rather than heavy capital investment (Page 10).

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Category 3

→Landmark Cars expects premiumization and luxury sales to be the key growth theme in India’s next decade, positioning the company for profitable high ROCE growth.
→Honda volumes are expected to more than double from September onwards with the launch of the Elevate model, which already has around 650 pre-bookings and is anticipated to be sold out for 3-4 months starting September.
→Jeep sales, which have been declining, are expected to bottom out in August and start an upward trajectory from September, targeting 800-900 units by October-November.
→MG Motor operations started recently in Madhya Pradesh, with revenue expected to commence immediately.
→Pre-owned car business targeted to grow from ~₹100 crores to ₹200 crores in 2 years, aiming for profitability with a scalable business model.
→After-sales revenue has historically grown at 20% CAGR and is expected to continue this trajectory.
→Overall, the company aims to hit profitable, high ROCE growth despite near-term quarterly challenges.

Category 3

→Landmark Cars Limited aims for profitable, high ROCE growth focusing on premiumization and luxury sales as India moves into the next decade.
→Despite Q1 softness, management is confident of growth recovery with new launches (e.g., Honda Elevate).
→They expect working capital days to normalize around 40 days in coming quarters, aiding cash flow.
→After-sales revenue has strong traction with a 20% CAGR over 9 years, expected to continue.
→Pre-owned car sales targeted at over ₹100 crores this year, with plans for significant growth thereafter.
→Average selling price (ASP) rose 22% YoY, driven by premium product mix and price increases.
→EBITDA margin at 5% on pro forma revenue with intent to maintain profitability while scaling.
→Management expects to outperform auto industry growth with double-digit growth guidance from key OEM partners like Mercedes Benz.

Yes

→For the Honda Elevate model, the company currently has around 650 bookings.
→They expect to be sold out for at least 3 to 4 months by the time the car is officially launched, anticipated in early September.
→For the Mercedes GLC, the initial potential announced was around 1,500 units, which aligns with bookings so far, and demand has only increased in the few days since.
→Supply constraints for high-end models like GLC are expected to ease in the coming quarters.
→There's continuing demand and bookings for other high-end models, but specific numbers beyond the above are not provided.

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