Landmark Cars IPO: Should you apply?

About the company
Landmark Cars is an automotive retailer for premium and luxury brands in India and is the number one dealer for Mercedes-Benz, Honda and Jeep. Its revenue sources include vehicle sales (80 per cent) and after-sales services (20 per cent).

Strengths

• The company has enjoyed long-standing partnerships with brands like Honda, Mercedes, and Volkswagen, some going as far back as 1998.
• India is still an underpenetrated market for luxury and premium cars. According to a CRISIL report, the premium and luxury car market is expected to grow at a 12 and 16 per cent rate, respectively.

Weaknesses

• Low sales volume and cyclical industry: Vehicle sales growth in terms of volume has been abysmal for three of its clients. Honda suffered a year-on-year decline of -4.6 per cent, Mercedes posted a 5.6 per cent growth, and Renault recorded a measly 3.2 per cent growth. Further, the industry's cyclical nature means its topline suffers from uncertainty.
• Dependence on brands: The company is primarily a retailer for luxury and premium car brands. Hence, its performance is tied to customer sentiment towards these brands.

Disclaimer: This is not a stock recommendation. Do your due diligence before investing.

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