Landmark Cars IPO subscribed 4% in first 2 hours of bidding process; employee quota attracts 28% bids

The Rs 552 crore Landmark Cars IPO was subscribed 4 per cent in the first two hours of the bidding process on Monday, with the employee quota seeing 28 per cent subscription. The issue received bids for 3,03,340 shares against the issue size of 80,41,805 shares. The quota reserved for retail individual investors (RIIs) was subscribed 7 per cent while that of non institutional investors(NIIs) was subscribed 1 per cent.

At the upper end of the price band Rs 481-506, the IPO is asking a valuation of 28 times FY22 earnings per share. Analysts said the IPO is a play on premium, luxury car sales in the domestic market. Last heard, the IPO was commanding a grey market premium (GMP) of Rs 30 apiece.

Landmark Cars has automotive dealership for major OEMs with strong focus on high growth segments namely premium and luxury. Landmark's growing presence in after-sales segment is leading to predictable growth in revenues and superior margins, ICICIdirect said, which added that 

Landmark's inclusive business model is capturing entire customer value chain.

Ahead of the issue, Landmark Cars announced allocation of 32,66,797 shares to anchor investors, aggregating Rs 165.29 crore.  The IPO consists of a fresh issue of equity shares aggregating to Rs 150 crore and an offer-for-sale (OFS) of up to Rs 402 crore. Among selling shareholders are Sanjay Karsandas Thakker HUF, TPG Growth II SF PTE, Aastha and Garima Misra.

Sales at Landmark Cars have grown at a CAGR of 15.8 per cent over FY20-22, with the company turning meaningfully profitable in FY22 with PAT at Rs 66 crore in FY22, led by improvement in Ebitda margin profile to 6 per cent against 3 per cent in FY20.

Arihant Capital said Landmark Cars has demonstrated stellar revenue growth at 52.17 per cent last year. It is well placed in its target markets with little threat from bigger players, Arihant Capital said.

"Considering its strategies to gain from entire customer value chain, entering the EV segment and plans for growing presence in after sales segment, the company is well poised to grow its market share in the years to come. We recommend that investors subscribe for listing gains," it said.

The IPO will conclude on December 15, the basis of allotment will finalised by December 20, the initiation of funds is expected by December 21, credit of shares by December 22 and listing by December 23.

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