Landmark Cars Q1 FY27 earnings call

Landmark Cars Limited commenced FY27 on a strong note, achieving its best-ever Q1 performance despite the quarter being seasonally soft. Pro forma revenue from operations grew over 22% year-on-year, while profit after tax nearly doubled, outpacing revenue growth. This robust financial performance was attributed to improving operating leverage and sustained cost discipline, reflecting the continued scaling of the business.

The company reported that 30% of its vehicles sold by value were Electric Vehicles (EVs), significantly higher than the industry average. Management highlighted that EVs run more on the road, increasing frequency of periodic maintenance and accident repairs, which are also more costly for EVs. Landmark has partnered with ChargeZone, a leading EV charging network, to offer wallet credits to EV customers and earn a share of charging revenue, creating a new recurring revenue stream. The aftersales contribution from new high-growth brands, including EVs, is currently 19% compared to 38% in new car sales, indicating significant future upside potential.

Mercedes-Benz continues to be a leading luxury brand, with Landmark's average selling price increasing to INR79 lakh in Q1 FY27 from INR73 lakh in Q4 FY26. MG Motors saw positive impact from EV penetration, with a new SUV launch expected and an additional showroom in Ahmedabad. Mahindra maintains strong momentum with new launches and a new workshop in Hyderabad. BYD's supply is expected to improve, with hybrid models launching later this year and the luxury brand Denza launching shortly. Honda plans to launch the Alpha 0 electric SUV later this year, aligning with the broader EV shift. The company is selectively expanding service facilities and workshops, including a new 50,000 sq ft workshop in Mumbai for Mercedes-Benz, BYD, and Jeep.

While gross margins were noted as 'a little soft' this quarter, management clarified that gross margin is a complex metric influenced by varying business models and cost structures across different brands. They emphasized that the focus should be on EBITDA and PAT levels, along with cash profit, as these better reflect the overall business performance. The company's EBITDA percentage stands at 5.8%, which is consistent with the last two years, with expectations for further improvement.

The company generated almost INR60 crores in operating cash flow this quarter, demonstrating strong cash generation. Management stated that borrowing costs are stable, and the cash generated will be used to repay working capital loans. The guided capex for FY27 remains around INR50 crores, with the first quarter spend being less than proportionate. The company is actively looking for opportunities across OEMs and the ecosystem to deploy capital meaningfully, including potential takeovers or expansions.

The automotive industry continues to evolve with healthy customer demand and broader powertrain choices. Electric mobility is gaining significant traction, which Landmark is well-positioned to capitalize on. While the luxury market has grown slower than premium and mass segments, management believes that new offerings and competition will expand the overall addressable market rather than cannibalize existing shares. The company anticipates a more normalized and consistent demand trajectory through the later part of the year, following some lumpiness in the prior year due to GST-related changes.