Landmark Cars IPO: 17% subscribed on Day 1; HNIs, employees among top bidders

As per NSE data, at around 5 pm, cumulatively the IPO received bids of 14,04,383 equity shares — subscription of 17% of the total offered size of 80,41,805 equity shares.

Among the investors, the portion reserved for non-institutional investors aka HNIs subscribed to 39%, while employees reserved a portion fully subscribed by 1.20 times. Among HNIs, the majority bidding amount was more than ₹10 lakh, as per the NSE data. Meanwhile, the portion allocated to retail investors subscribed 17%. However, qualified institutional buyers (QIBs) showed lackluster responses to the IPO on the first day.

The IPO consists of fresh issues worth ₹150 crore and an offer for sale (OFS) of up to ₹402 crore. Under the OFS, the selling shareholders in the OFS are — TPG Growth II SF, Aastha Limited, Sanjay Karsandas Thakker HUF, and Garima Misra.

The IPO will be available from December 13 to 15th. The equity shares offered under the issue are fixed at a price band of ₹481 per share and ₹506 per share. There is a discount of ₹48 per equity share also being offered to eligible employees bidding in the Employee Reservation portion. The face value of the equity shares offered in the IPO is ₹5 each. 

Of the total, 50% of the IPO size is reserved for QIBs, while 35% is kept for retail investors and 15% is allotted to NIIs.

The company plans to utilise the proceeds from the fresh issue for pre-payment of borrowings availed by its subsidiaries and general corporate purposes.

Should you subscribe to the IPO? 

In its IPO note, ICICI Direct said, “Sales at LMC have grown at a CAGR of 15.8% over FY20-22, with the company turning meaningfully profitable in FY22 with PAT pegged at ₹66 crore in FY22, led by improvement in EBITDA margin profile to ~6% vs. ~3% in FY20. Consequently, RoE, and RoCE as of FY22 are at ~27%, 15%, respectively. At the upper end of the price band ( ₹481-506) it is valued at ~28x P/E as of FY22.” However, the stock brokerage has assigned ‘Unrated’ rating to the issue.

ICICI Direct highlighted key triggers for the company. These are:

– Leading automotive dealership for major OEMs with a strong focus on high-growth segments (premium & luxury)

– Growing presence in the after-sales segment leading to predictable growth in revenues and superior margins

– Inclusive business model capturing the entire customer value chain

– Robust business – leveraging upon innovation and digitisation.

On the other hand, in its IPO note, Reliance Securities said, based on FY22 earnings, the company is valued at 30.3x P/E, 12.7x EV/EBITDA, and 0.7x EV/Sales. Over the next couple of years, the premium market segment is expected to grow at a CAGR of 10-12% while the luxury vehicle segment is also expected to grow at a CAGR of 14-16%. Landmark is likely to report healthy numbers over the next couple of years led by strong growth in the premium car segment.

Given healthy financials, strong presence, leadership position, premium automotive retail business, and valuation comfort, Reliance Securities note added, “we recommend a ‘SUBSCRIBE’ to the issue.”

Landmark Cars are among the leading premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen, and Renault. The company has a commercial vehicle dealership with Ashok Leyland in India.

The company has presence across the automotive retail value chain, including sales of new vehicles, after-sales service, and repairs (including sales of spare parts, lubricants, and accessories), sales of pre-owned passenger vehicles, and facilitation of the sales of third-party financial and insurance products.

Post IPO issue, the company’s equity shares will be listed on exchanges BSE and NSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

This story has been published from a wire agency feed without modifications to the text.