Detailed Narrative
Strong FY25 Performance Driven by Strategic Expansion
Landmark Cars reported a robust FY25, achieving its highest ever proforma revenue of ₹5,626 crores, a 20.9% year-on-year growth. This significantly outpaced the passenger vehicle industry's 5% growth. The company successfully operationalized 23 out of 24 planned new outlets ahead of schedule and within budget, with the final outlet expected by June 2025, demonstrating strong execution capabilities.
Q4 FY25 Margins Impacted by Mercedes-Benz Weakness and New Brand Discounting
Despite a 17.4% YoY increase in Q4 FY25 proforma revenue to ₹1,526 crores, PAT (before Ind AS impact) declined to ₹5 crores from ₹13 crores in Q4 FY24. This was primarily due to a temporary weakness in Mercedes-Benz sales, which impacted variable earnings and reduced Mercedes sales margin by approximately 1.5%. Additionally, initial discounting for new brands to establish market presence also contributed to gross margin pressure, which stood at 17.2% for the quarter.
Cost Rationalization and After-sales Growth Initiatives
The company successfully brought down employee costs and other operating expenses to approximately 4% and 3.8% of proforma revenue respectively in H2 FY25, meeting its sub-4% target. Management aims for a further 10% reduction in these costs as a percentage of turnover in the next year. In after-sales, workshops for newly added brands are starting to contribute, with Kia Hyderabad workshops becoming operational in Q1 FY26, and the company expects to return to its 10-year growth rate in this segment.
BYD and New Brands Bolstering Growth and Market Share
New brands, including BYD, MG, and Mahindra, contributed approximately 21% to the total proforma sales revenue for FY25. BYD is experiencing its best year in India, with over 700 cars sold in April and May, driven by homologation of eMax 7 and Atto 3 which removed unit limits. Landmark has become a top 3 dealer for MG with a 4.5% market share. The company expects new brand share to increase further within a few quarters and projects BYD's all-India volume to reach 7,000-9,000 cars this year if the current pace continues.
Strategic Expansion and Outlook for FY26
Landmark Cars' current market share in the PV segment is approximately 0.5% by volume, indicating significant long-term growth potential. For FY26, the company aims to significantly outperform the projected mid-single-digit industry growth in both top line and bottom line. Management expects most of the new outlets that were initially unprofitable to reach breakeven or profitability within the next six months, and the after-sales gross margin for new brands to increase from 9% to 15-17% over time.