Landmark IPO subscribed 43% on Day 3 so far; grey market trend turns weak

The Rs 552 crore Landmark Cars IPO was subscribed 43 per cent on the Day 3 of the bidding process on Thursday, with the employee quota getting subscribed 2.32 times. The issue received bids for 34,34,992 shares against the issue size of 80,41,805 shares.

The quota reserved for retail individual investors (RIIs) attracted bids for 16,77,737 shares, which was 17 per cent of the 40,09,355 shares reserved for the category. The quota reserved for non institutional investors(NIIs) was subscribed 87 per cent while that for qualified institutional buyer (QIB) by 9 per cent.

Last heard, the issue was commanding a discount of Rs 7 in the grey market.

The IPO, which is being sold in the price band of Rs 481-506, is asking a valuation of 28 times FY22 earnings per share. A play on premium, luxury car sales in the domestic market,  the IPO was last commanding a grey market premium (GMP) of Rs 8, down from Rs 30 on Monday and above-Rs 50 level in the last few days.

Landmark Cars is the leading premium automotive retail business, with dealerships for Mercedes-Benz (since 2009), Honda (since 1998), Jeep (since 2017), Volkswagen (since 2008), Renault (since 2016) and BYD (since 2021, a leading player in the global EV market). The company also caters to the CV retail business of Ashok Leyland in India since 2012.

Ventura Securities noted that Landmark Cars earns 3 per cent-plus Ebitda margins on new vehicle sales and 18.5 per cent-plus  Ebitda margins on vehicle servicing, spares & lubricants. The company services 15-17 vehicles at its centres for every new vehicle sold from its showroom. The higher the number of new vehicle volumes, the more will be the vehicle volumes on service centres and the better would be the Ebitda margins, it noted.

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 allocated 32,66,797 shares to anchor investors, aggregating Rs 165.29 crore.  The issue 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.

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