TPG backed Premium and Luxury Auto Dealer Group Landmark files DRHP for its Rs 762 crore IPO

Ahmedabad-based Landmark Cars Ltd, a leading premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault has filed its draft red herring prospectus (DRHP) for Rs 762 crore initial public offering (IPO) with Sebi.

According to the draft papers, the issue consists of a fresh issue of equity shares aggregating to Rs 150 crore and an offer for sale (OFS) of up to Rs 612 crore.

The Offer for Sale comprises up to Rs 400 crore by TPG Growth II SF PTE Ltd, up to Rs 62 crore by Sanjay Karsandas Thakker HUF, up to Rs 120 crore by Aastha Limited and up to Rs 30 crore by Garima Misra (“Selling Shareholders.”). The offer also includes a reservation for subscription by eligible employees.

The proceeds from its fresh issuance worth Rs. 120 crores will be utilised for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company and general corporate purposes.

Landmark Cars, otherwise known as Group Landmark has a presence across the automotive retail value chain, which includes sale of new vehicles (passenger as well as commercial), after-sales service and repairs (including sales of spare parts, lubricants and accessories), sales of pre-owned passenger vehicles. As a value add-on to its passenger vehicle sales, it also facilitates sale of third-party financial products including insurance policies and vehicle finance through its dealerships.

According to new vehicle sales, it stands to be the number one dealer for Mercedes-Benz, Honda, Stellantis (Jeep) in fiscal 2021, and Volkswagen and Renault in calendar year 2020. In FY21 Landmark dealerships have sold 1,133 vehicles for Mercedes and more than 4000 vehicles for Honda and Renault. Overall the company has sold above 1,30,000 Cars across all the brands it caters too. Additionally, the company has recently forayed into a partnership with global EV giant BYD to sell its MP6 Electric Vehicle in Mumbai & Delhi NCR.

Led by Sanjay Thakker, Chairman & Founder, who started the operations and opened the first dealership for Honda in the year 1998, and later expanded its network to about 112 outlets in 8 Indian states, comprising of in excess of 60 sales showrooms and outlets and more than 50 after-sales service and spares outlets, with a focus on the premium and luxury automotive segments.

The company’s business processes include monitoring and adapting to trends in customer preferences by managing its inventory and diversifying its portfolio and to facilitates its customers who use their websites to track their vehicle maintenance schedules and reach out to for any complaints or queries. In addition, to the websites, it has also launched a chatbot on a leading instant messaging application to resolve customer queries and to book after-sales service appointments.

Besides being an automotive dealer, it has also made forays into technology and platforms through investments in Chatpay Commerce Private Limited (known as “Pitstop”), a multi-brand car service and repair provider and Sheerdrive Private Limited (“Sheerdrive”), an auto technology startup holding 9.79% and 19.97% respectively. The company receives more than 50% of its earnings from its after sales segment and if focused on building it up through better service initiation, revenue per car serviced, increase body paint (accident related) jobs, centralizing purchases, sharing locations and non-technical staff, adding dealers and technological integration.

Landmark Cars recorded a profit of Rs 11.15 crore on total income of Rs 1966.34 crore for FY21, and clocked a profit of Rs 27.95 crore on revenue of Rs 1419.79 crore for the six month ended September 2021.

According to a report by rating agency, CRISIL in December 2021, it expects the premium segment to grow at a CAGR of 10-12% CAGR from Fiscal 2021 to Fiscal 2026, while the luxury segment is expected to grow at a CAGR of 20-22% during the same period, driven by moderate macroeconomic growth, increasing urbanization, increasing disposable income, relatively stable costs of PVs, and improved availability of auto finance. However, it could get impacted by subsequent waves of the COVID-19 pandemic resulting in any localised or extended lockdowns and overall industry sales.

Axis Capital Limited and ICICI Securities Limited are the Book Running Lead Managers and Link Intime India Private Limited is the registrar to the Issue.