Landmark Cars Limited — Q4 FY25 earnings call

Call held 29 May 2025

Management summary

Landmark Cars reported a strong FY25 with 20.9% YoY revenue growth, outperforming the industry, driven by strategic expansion and new brand additions. While Q4 FY25 saw a dip in PAT and margins due to temporary Mercedes-Benz sales weakness and initial discounting for new brands, the company achieved its highest ever proforma revenue and net operating cash flow for the full year. Management is optimistic about margin recovery and continued outperformance in FY26, with cost rationalization and new outlet profitability on the horizon.

Highlights

  • Total Proforma Revenue for FY25 reached ₹5,626 crores, marking a 20.9% YoY growth, significantly outperforming the passenger vehicle industry's 5% growth.

  • Q4 FY25 Proforma Revenue grew 17.4% YoY to ₹1,526 crores, with new car sales at ₹1,281 crores and after-sales revenue at ₹245 crores.

  • Net Operating Cash Flow for FY25 was ₹152 crores, the best performing since listing, demonstrating strong cash generation.

  • The company successfully operationalized 23 out of 24 planned new outlets ahead of timelines and within budgeted costs, with the last one expected by June 2025.

  • Average selling price of new cars increased to ₹21.24 lakhs in Q4 FY25 from ₹20.38 lakhs in the previous quarter, indicating premiumization.

Concerns

  • PAT (before net Ind AS impact) for Q4 FY25 was ₹5 crores, a significant decline from ₹13 crores in Q4 FY24, primarily due to lower Mercedes-Benz sales and discounting on new brands.

  • EBITDA margin for Q4 FY25 was 5.57%, impacted by new workshops not yet reaching full capacity and temporary weakness in Mercedes-Benz sales.

  • Gross profit margin for FY25 was 16.5%, down from 18-19% in previous years, attributed to the lower after-sales mix from newer brands.

  • Mercedes-Benz sales were temporarily affected in Q4 FY25 due to weak customer sentiment and capital market volatility, leading to foregone variable earnings and a ~1.5% impact on Mercedes sales margin.

Key financials

2 periods

Q4

  • Proforma Revenue
    ₹1,526 Cr
    YoY +17.4%
  • Gross Profit
    ₹188 Cr
    YoY +9.9%
  • EBITDA
    ₹60.8 Cr
    YoY +8.1%
  • PAT (pre-Ind AS)
    ₹5 Cr
    YoY -61.5%

FY25

  • Proforma Revenue
    ₹5,626 Cr
    YoY +20.9%
  • Gross Profit
    ₹710 Cr
    YoY +9%
  • EBITDA
    ₹235 Cr
    YoY +3.5%
  • PAT (pre-Ind AS)
    ₹25.8 Cr
    YoY -59%
  • Net Operating Cash Flow
    ₹152 Cr

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.

Segment breakdown

  • New Car Sales
    ₹1,281 Cr Q4 Proforma Revenue
  • After-sales
    ₹245 Cr Q4 Revenue

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Depreciation for newly launched outlets (Ind AS 16 impact) ₹35.6 Cr
    • Estimated annual depreciation for FY25 (including Ind AS impact) for new outlets ₹145 Cr
    The depreciation stood at Rs. 35.6 crore, reflecting the impact of Ind AS 16 for newly launched outlet. It was marginally higher than the previous quarter due to the operationalization of new incremental outlets. An increase in finance cost was mainly driven by higher inventory on the back of addition of new showroom and CapEx requirement for recently opened locations. ... Including this, our depreciation for the year is estimated at approximately Rs. 145 crore including the Ind AS impact.
  • Debt Debt disclosed
    An increase in finance cost was mainly driven by higher inventory on the back of addition of new showroom and CapEx requirement for recently opened locations.
  • Dividend ₹0.5/share (interim)
    Our profit after tax before the net Ind AS impact stood at Rs. 25.8 crore versus Rs. 62.9 crore in previous year. In Financial Year '25, we reported approximately Rs. 152 crore net operating cash flow, our best performing since listing. I would like to update you that the Board has approved dividend of Rs. 0.50 per share.
  • Liquidity Liquidity disclosed New car inventory maintained at under 45 days, lower than the industry average of approximately 50 to 55 days.
    Our new car inventory is maintained at under 45 days lower than the industry average of approximately 50 to 55 days.

Guidance & targets

Volume

  • Passenger Vehicle Industry Growth Volume · FY26 · Medium confidence mid-single digit
    The industry is projected to grow in mid-single digit.

    — Sanjay Thakker

  • Mercedes-Benz Sales Growth Volume · rest of calendar year · Medium confidence double-digit growth
    The top-end vehicles priced over Rs. 1.5 crores continue to contribute to 25% of the sales volumes. And the brand is expecting double-digit growth for the rest of the calendar year.

    — Aryaman Thakker

  • BYD All India Sales Volume Volume · this year · Medium confidence 7,000-9,000 cars

    From 3,000 cars (CY24) today

    If this pace continues, then their volume could be in the region of anywhere between 7,000 to 9,000 cars for the year, all India.

    — Sanjay Thakker

Revenue

  • Company Top Line Growth Revenue · FY26 · High confidence significantly outperform industrial growth
    Our focus remains on significantly outperforming the industrial growth in top line as well as the bottom-line.

    — Sanjay Thakker

Profitability

  • Company Bottom Line Growth Profitability · FY26 · High confidence significantly outperform industrial growth
    Our focus remains on significantly outperforming the industrial growth in top line as well as the bottom-line.

    — Sanjay Thakker

  • New Outlets Profitability Profitability · by end of 6 months · Medium confidence breakeven or profitable

    From negative PBT today

    The answer to your second thing is that we are hoping that only a few outlets remain non-profitable at worst by the end of the six months' period that you kind of mentioned and all come into a breakeven or a profitable zone.

    — Sanjay Thakker

Market Share

  • New Brand Share Market Share · within few quarters · Medium confidence increase further
    Over the full year, our newly added brands, including BYD, contributed approximately 21% to the total proforma sales revenue. We are hopeful that within a few quarters, the new brand share will increase further.

    — Aryaman Thakker

After-sales

  • After-sales Business Growth Rate After-sales · this year · Medium confidence return to 10-year growth rate
    We are expecting to return to our 10-year growth rate in the after-sales business this year.

    — Aryaman Thakker

Cost

  • Employee Cost Reduction Cost · next year · High confidence 10% reduction
    We are aiming to further reduce these costs by 10% in the next year.

    — Aryaman Thakker

  • Other Operating Expense Reduction Cost · next year · High confidence 10% reduction

    — Aryaman Thakker

  • Total Company Rental Expense Cost · next year · High confidence ₹110 crores

    From ₹100 crores today

    Hold on, sir. So, last year it was around Rs. 100 crore and the next year it will be around Rs. 110 crore. This is I am telling without Ind AS thing.

    — Surendra Agarwal

Margin

  • New Brands After-sales Gross Margin Margin · over time · Medium confidence 15-17%

    From 9% today

    For older brands, that is 17% of the turnover of those brands. For newer brands, it is 9% currently. Now this 9% will keep on going up and it will reach at one point 15%, 16%, 17% in the times to come.

    — Sanjay Thakker

What to watch in Q1 FY26

Profitability of newly opened outlets

within 6 months
Current 17 new outlets with negative PBT of ₹40 crores in FY25
Target Most outlets breakeven or profitable

Why it matters

The profitability of new outlets is key to overall margin expansion and bottom-line growth, especially given the initial losses incurred.

The answer to your second thing is that we are hoping that only a few outlets remain non-profitable at worst by the end of the six months' period that you kind of mentioned and all come into a breakeven or a profitable zone.

Risks & concerns

  • Macroeconomic headwinds and trade tensions impacting consumer sentiment

    medium

    Global trade tensions and domestic unrest particularly weighed heavily on consumer sentiments in the last quarter.

    Management acknowledged

  • Potential drop in import duties due to Liberation Day announcements

    medium

    The Indian auto industry, long protected by high tariff barriers, is likely to see a drop in import duties over a period of time.

    Management acknowledged

  • Temporary weakness in Mercedes-Benz sales due to capital market volatility

    medium

    Mercedes' sales were temporarily affected due to a weak customer sentiment driven mainly due to capital market volatility, impacting variable earnings and margins.

    Management acknowledged

  • Initial discounting for new brands impacting gross margins

    medium

    Newer brands required some amount of discounting to establish presence in new markets, impacting gross margins, especially in Q4 FY25.

    Management acknowledged

  • New workshops not reaching full capacity impacting gross profit margin

    low

    Despite new workshops contributing, they are yet to reach their full capacity, thus impacting the gross profit margin.

    Management acknowledged

  • Chinese magnet supply restriction impacting Indian car production

    low

    Analyst raised concern about magnet supply, but management viewed it as a short-term positive for inventory cleanup.

    Analyst downplayed

Q&A highlights

8 direct
Profitability timeline for new outlets and negative PBT impact Direct
So, Abhisar, the answer is that yes, this number, but just to put the number of approximately Rs. 40 crores in perspective, it includes a lot of rent and salaries that we had to pay before we started the operation, since we cannot capitalize this. ... The answer to your second thing is that we are hoping that only a few outlets remain non-profitable at worst by the end of the six months' period that you kind of mentioned and all come into a breakeven or a profitable zone.

Analysts sought clarity on the significant negative PBT from new outlets and the timeline for them to become profitable, which is crucial for future earnings.

Asked by Abhisar Jain

Impact of Mercedes-Benz sales miss and new brand discounting on Q4 margins Direct
So, in new cars, Pritesh, the last quarter especially was one of the few in recent memory where we were unable to meet our Mercedes-Benz targets. ... But that took away approximately 1.5% of our Mercedes sales margin, which is an important aspect of what we are doing. Also, it is the newer brands that we have had a play, where we are entering the market, there was some amount of discounting for those brands, and we hope to get back to some decent margins in this current year.

This question addressed the reasons behind the Q4 margin compression despite revenue growth, highlighting specific brand-level challenges and strategic discounting for market entry.

Asked by Pritesh Chheda

BYD sales surge and market share outlook Direct
Yes, so the thing which has happened, Abhisar, is that their homologation has happened for two of the four models that we are selling currently, which is the eMax 7 and the Atto 3. Now, what it means is that the 2,500-unit limit which is applicable generally doesn't apply to these two models. So, the supply becomes infinite theoretically. So, that's what has happened, and we are seeing traction in those models which are now supplied without any limit. ... If this pace continues, then their volume could be in the region of anywhere between 7,000 to 9,000 cars for the year, all India.

The response revealed a key driver for BYD's recent sales success (homologation lifting unit limits) and provided a specific volume target for the year, indicating strong growth potential for the brand.

Asked by Abhisar Jain

Increase in other expenses quarter-on-quarter Direct
Yes, so surely. So, if you will see the trajectory of our other costs as a percentage of turnover, what we had kind of said, and this was what we were kind of and this was we were many quarters back where we stuck our neck out and said that our other costs will go down below 4%. And that has gone below 4%. ... Now, there are costs which are incurred in our business. ... Like a Mercedes Golf Tournament is held in this quarter. It is just held in this quarter every year. ... We have some drive events which are very high-end and costly. They are done once in a year. So, it is mainly advertisement expenses that we have incurred.

The analyst questioned the Q-o-Q increase in other expenses despite cost rationalization efforts, and management clarified it was due to annual, high-cost marketing events and not a deviation from the overall cost reduction trajectory.

Asked by Sabyasachi Mukherjee

Strategy for new market entry and discounting Direct
In the markets that we are getting into, we need to make our presence felt. The new brands where we were new entrants into the markets with the brands, we had to kind of get the customer buying for our brands. ... dealers, give a part of their margins by way of discounts as a nature of the business. It is just that because we have a geographical exclusivity, our margins are protected in those regions because we don't have a competing code that comes in. But to answer your question in a, I mean, if it was a Hyderabad, yes, we need to give a little bit of a discount away from our margins to attract customers and popularize our new showroom.

This clarified management's strategy of using discounting as an entry-level tactic in new, non-exclusive markets to build presence, explaining the pressure on gross margins from newer brands.

Asked by Sabyasachi Mukherjee

Overall margin erosion and path to 2-3% PAT margin Direct
So, I think the important aspect that we haven't yet discussed on this call is the upfronting of the depreciation because of Ind AS also. ... So, the good news is that once the business gets mature and starts delivering, at that time, simultaneously, the depreciation will also start coming down. The component of after sales and this is something which I had mentioned earlier, for new business, for gross margin to click in, we need after sales business which is a 40% gross margin business. ... Now this 9% will keep on going up and it will reach at one point 15%, 16%, 17% in the times to come. Now once that happens, the stable state margins will be reflected.

This comprehensive question addressed the various factors contributing to margin erosion (depreciation, after-sales mix) and management's strategy for recovery, linking it to the maturation of new businesses and improved after-sales contribution.

Asked by Dhiraj Kaswan

Acquisition vs. Greenfield strategy for future expansion Direct
Our expansions out of this 24 outlets that we are talking about is not that high. It could be, my sense is, 3 or 4 locations out of 24 were acquired. ... The number is around 7, 8 out of 24 were acquired in this period. So, wherever the acquisitions have happened, those have hit the ground running and many of them are already profitable. But the point is that whatever we start Greenfield takes a little bit of time to ramp up. It is cheaper, but it takes a little time to ramp up, around a year for it to kind of come to the decent level.

The analyst questioned the sustainability of expansion given existing market saturation, and management clarified their mixed strategy of selective acquisitions for immediate profitability and greenfield for cost-effectiveness, with a focus on eliminating local competition.

Asked by Dhiraj Kaswan

Total rental expense for the company Direct
Hold on, sir. So, last year it was around Rs. 100 crore and the next year it will be around Rs. 110 crore. This is I am telling without Ind AS thing.

This question provided a specific, forward-looking cost item (rental expense) for the entire company, which is useful for financial modeling.

Asked by Abhisar Jain

2 min read 5 chapters

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.

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