Landmark Cars Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Landmark Cars reported robust revenue growth in Q2 FY26, driven by strong new car sales and a record-high average selling price. Despite temporary gross margin pressure from the GST transition and associated discounting, the company is optimistic about margin recovery and sustained demand. New OEM partnerships like Honda and BYD are showing significant potential, with management guiding for improved profitability in the coming quarters.

Highlights

  • Total proforma revenue for Q2 FY26 stood at INR 1,657 crores, reflecting a strong 30.67% year-on-year growth.

  • New car proforma sales contributed INR 1,403 crores, registering a 35% year-on-year growth.

  • Average selling price of new cars in Q2 FY26 reached INR 23.16 lakhs, the highest ever ASP, supported by higher sales of premium cars like Mercedes-Benz.

  • Management expects gross profit percentages to increase by over 100 basis points for the remainder of the year.

  • Strong demand for BYD models, with the brand crossing 1,000 unit sales in October and Landmark being the largest partner.

Concerns

  • Gross margin for Q2 FY26 was subdued at 16.2% due to temporary pressure from GST transition, one-time discounts, and free accessories.

  • Aftersales revenue growth was lower at 11.2% YoY, and service margins were impacted by new workshop ramp-ups and GST reduction on spare parts.

  • Employee expenses rose by 15-16% QoQ due to new store openings, increments, and additional incentives.

Key financials

  1. Total Proforma Revenue ₹1,657 Cr +30.7%YoY
  2. New Car Proforma Sales ₹1,403 Cr +35%YoY
  3. Aftersales Revenue ₹254 Cr +11.2%YoY
  4. Gross Profit ₹196 Cr
  5. Gross Margin 16.2%
  6. EBITDA ₹59 Cr
  7. EBITDA Margin 4.9%
  8. PAT (before Ind AS) ₹3 Cr
  9. Average Selling Price (New Cars) ₹23.16 lakh

What they filed

Q1 FY27: revenue up 22.6%, net profit up 114.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue907 1,195 1,091 1,062 1,211 +34%1,345 +13%1,279 +17%1,302 +23%
EBITDA52 66 55 61 54 +4%74 +12%76 +38%72 +18%
Net profit0 12 2 7 2 14 +17%15 +650%15 +114%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • Gross Profit Percentage Profitability · balance part of the year · High confidence increase by over 100 basis points
    We are guiding that the gross profit percentages going ahead for the balance part of the year will increase by over 100 basis points.

    — Sanjay Thakker

  • New Outlets Profitability Profitability · end of next quarter · High confidence not be loss-making
    For the new outlets by the end of next quarter, I would really not want any of these outlets to be loss-making.

    — Sanjay Thakker

Volume

  • Honda Volumes Volume · next 5 years · High confidence fivefold increase
    Our large relationships like Honda have announced very aggressive plans for India, indicating a fivefold increase in the volumes in the next 5 years.

    — Sanjay Thakker

  • BYD Volume Growth Volume · this year · Medium confidence 3x over last year
    Right now, I think the volume for this year would have grown 3x over last year, and this seems to be like the beginning of very good journey with BYD.

    — Sanjay Thakker

Product Launches

  • Honda New Models Product Launches · by 2030 · High confidence 10 new models
    Honda's plan to introduce 10 new models in India by 2030 signals a fresh chapter for the brand's market presence.

    — Aryaman Thakker

What to watch in Q3 FY26

Gross Profit Percentage Improvement

balance part of the year
Current 16.2% in Q2 FY26
Target increase by over 100 basis points

Why it matters

Indicates the company's ability to recover margins post-GST transition and discounting.

We are guiding that the gross profit percentages going ahead for the balance part of the year will increase by over 100 basis points.

Risks & concerns

  • Temporary pressure on gross margins due to GST transition

    medium

    GST transition led to one-time discounts and free accessories, temporarily impacting gross margins in Q2 FY26.

    While these short-term measures helped maintain customer engagement, they also exerted temporary pressure on the gross margins.

    Management acknowledged

  • Uncertainty regarding cess credit utilization

    medium

    The matter regarding Compensation cess is sub judice, but the company proactively liquidated inventory to manage the impact.

    While the matter remains sub judice at present, only time will reveal how the situation ultimately unfolds. Currently, the cess credit in our books is not a very meaningful number.

    Management acknowledged

  • New workshop ramp-up impacting service margins

    medium

    Newly opened workshops for brands like Mahindra, Kia, and MG are not yet operating at full capacity, leading to a mix effect and lower service margins.

    So the workshops of Mahindra, or Kia and MG, for example, are working currently not at the same level as our, say, Mercedes or Honda workshops are working. So it is a mix effect, which will over a period of time go back to its level.

    Management acknowledged

  • Supply chain and delivery constraints

    low

    Some supply chain and delivery constraints still exist but are expected to ease in the coming time.

    While we are aware that some supply chain and delivery constraints still remain, we expect them to ease out in the coming time.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Pre-owned car segment growth and impact of new car pricing Direct
So in fact, what we are seeing on an industry basis is that because the new car prices have become affordable, there has been a pressure on used car sales because the difference between those prices have reduced.

Highlights the competitive pressure on the used car market due to GST-driven affordability of new cars.

Asked by Arnav Sakhuja

BYD local assembly plans and JV Partial
Yes, this is something which has been going around for a very long time and one can't really say until it actually happens. So currently, as you know, there are 4 models of BYD cars that we sell. The Atto 3, the eMax 7, which are both homologated and as such, do not have any restriction on the number of vehicles that can be sold for these 2 models. We believe that the Sealion, which Aryaman spoke about and which kind of ran out and did very well. That is in the process of getting homologated.

Provides insight into BYD's potential localization and current product portfolio, indicating future growth drivers.

Asked by Arnav Sakhuja

Gross margin dip in Mercedes-Benz business Direct
Now what happens in Mercedes type of business, there are 2 things which happened to compress our margins in Mercedes-Benz. We have a decent amount of demo car stock in our Mercedes portfolio, which is in our books. Now we had to liquidate a lot of demo cars because of the reasons that we have stated at length in our presentation as well So, this is something which has impacted us mainly.

Explains the specific reason for margin compression in a key premium segment, linking it to inventory liquidation.

Asked by Pranay Roop Chatterjee

Increase in employee expenses Direct
So, it is again, you have read it right. The point is that it is store opening, plus there has been an increment of our company, which has come into play from this quarter. And there have been some additional incentives that we had to pay out, out of line to liquidate some tough cars to sell in this quarter.

Clarifies the drivers behind rising operating costs, including expansion and one-off incentives.

Asked by Pranay Roop Chatterjee

Cess liability and discount impact on margins Partial
I would not say that we have incurred 1%. We have incurred a lesser amount and the expenses have gotten kind of into various heads, including incentives, including advertisements, including transportation discounts, incentives, all kinds of things. But it was nowhere near 1%.

Provides clarity on the financial impact of cess recovery and associated discounting, indicating it was less severe than implied.

Asked by Lokesh Manik

Increase in interest expense despite lower inventory Direct
So Lokesh, the interest cost, in the quarter, if we remove the Ind AS activity, it is at INR 12 crores versus INR 10.5 crores in the last year. So it is like a INR 2 crores increase in the quarter with the higher sale. And the inventory, if you look at is always be at the quarter end. So the quarter end, obviously, with the GST and the liquidation of more and more stock, the quarter end inventory is lower. So the benefit which we see on the lower inventory will come in the coming quarter.

Explains the slight increase in finance cost and indicates future improvement from lower inventory levels.

Asked by Lokesh Manik

Decline in service margins QoQ Direct
So Bhavya, it is not the same set of workshops. What has happened is that in this quarter, many of the newly set up workshops got added into it. So the workshops of Mahindra, or Kia and MG, for example, are working currently not at the same level as our, say, Mercedes or Honda workshops are working. So it is a mix effect, which will over a period of time go back to its level.

Identifies the reason for service margin pressure as the ramp-up phase of new, less mature workshops.

Asked by Bhavya

Average discount level for cess credit offset Evasive
I mean this is the most difficult question that you have asked or this is a question has been asked on this call. I do not know because we were actually, during that period, we were having kind of, if not daily kind of every 2-3 day calls to figure out what discounts we would give to offset the cess credit in which state and all that. So there is no answer. The thing to kind of take back today is that those discounts are a thing of the past, and things are looking good as of now.

Management was unable to provide a specific number for discounts, highlighting the complexity and dynamic nature of the GST transition period.

Asked by Bhavya

3 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Landmark Cars reported a total proforma revenue of INR 1,657 crores for Q2 FY26, marking a significant 30.67% year-on-year growth from INR 1,268 crores in the prior year. New car proforma sales were a major contributor, growing 35% YoY to INR 1,403 crores, while aftersales revenue increased by 11.2% YoY to INR 254 crores. The company achieved a gross profit of INR 196 crores, translating to a gross margin of 16.2% on reported revenue, with EBITDA at INR 59 crores and an EBITDA margin of 4.9%.

Impact of GST Rate Revision and Market Dynamics

The quarter was significantly influenced by the GST rate revision announced on August 15th, 2025, leading to deferred purchases and a sudden spike in demand in the last 9 days of September. This transition, coupled with the abolition of compensation cess, created ambiguity and temporary pressure on gross margins due to selective discounting and incentives. However, the industry saw a double-digit growth in October, reaching 5.5 lakh cars, indicating strong demand post-GST reduction across all ICE cars and lower interest rates.

New Car Sales and Premiumization Trends

New car sales demonstrated robust growth, with the average selling price (ASP) of new cars reaching an all-time high of INR 23.16 lakhs in Q2 FY26. This was primarily driven by higher sales of premium and luxury vehicles, notably Mercedes-Benz, where the average selling price now stands at just under INR 70 lakhs. The company anticipates continued demand momentum from new model lineups and ongoing OEM promotions, especially during the wedding season and year-end.

Aftersales Business and Margin Pressures

Aftersales revenue grew 11.2% YoY to INR 254 crores, but service margins experienced a decline QoQ. This was attributed to a mix effect from newly opened workshops for brands like Mahindra, Kia, and MG, which are not yet operating at the same maturity level as established Mercedes or Honda workshops. Additionally, the reduction of GST on spare parts from 28% to 18% led to some postponement of repairs by customers, impacting Q2 aftersales performance, though this is expected to improve.

OEM Partnerships and Growth Outlook

Landmark Cars highlighted strong partnerships with OEMs. Honda has aggressive plans for India, aiming for a fivefold increase in volumes over the next 5 years and introducing 10 new models by 2030, focusing on SUVs and electric powertrains. BYD also showed robust demand, crossing 1,000 unit sales in October, with Landmark being its largest partner, contributing over 20% of its volumes. Renault and MG also reported healthy growth and robust demand for new verticals.

Operational Efficiency and Cost Management

Despite the challenges, the company focused on operational efficiency. Employee expenses increased by 15-16% QoQ due to new store openings, annual increments, and incentives to liquidate specific car models. Finance costs for the quarter were INR 20 crores, with management expecting a tapering down of interest expenses in the coming quarter due to lower inventory levels. The company aims for new outlets to become non-loss-making by the end of the next quarter.

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