Auto sector catches Prashant Jain’s fancy: Landmark Cars 2nd purchase in a month

After checking into Wheels India on May 19, veteran fund manager Prashant Jain has now bought shares of Landmark Cars. Jain’s 3P India Equity Fund was one of the buyers in TPG’s stake sale and bought 3 lakh shares of the company on June 23.

This is Jain’s second buy after starting his own Cat-III alternative investment fund. Apart from Jain, Landmark Cars has also caught Sunil Sighania’s attention as Abakkus Diversified Alpha Fund and Abakkus Asset Manager LLP were also some buyers.

Also Read: Prashant Jain has bought into Wheels India. All you need to know about the company

At 10:30 am, Landmark Cars was quoting at Rs 724 on the NSE, higher by 1 percent from previous close. The stock rallied over 8 percent on June 23 when the block deal took place and the high profile funds checked in.

Landmark Cars is involved in premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen, and Renault. It also has a commercial vehicle dealership with Ashok Leyland.

Apart from retailing new vehicles, it is also involved in servicing and repairing vehicles, selling spare parts, lubricants, and other products. Distribution of third-party finance and insurance products is also one of its revenue streams.

The financials

CRISIL Research expects the premium care segment to grow at a CAGR of 10-12 percent over the next four years, while the luxury segment is expected to grow at a CAGR of 14-16 percent during the same period.

In Q4, the company’s consolidated net profit jumped 28.13 percent year-on-year to Rs 24.05 crore on 17.5 percent YoY rise in revenue from operations to Rs 853.79 crore.

Domestic broking firm Axis Securities has recently initiated coverage on the stock with a ‘buy’ rating and target price of Rs 810 on the back of strong execution capability, a prominent market position in the luxury segment, a close correlation with the premiumisation trend and diversified revenue streams that can withstand fluctuations in new-vehicle sales.

“In India, only 4 percent of the dollar millionaires buy luxury cars. The global average is 60 percent. So, the opportunity to grow is huge,” said Sanjay Thakker, chairman and managing director of Landmark Cars in a Q4 earnings concall.

The company is also increasingly focusing on buying and selling of pre-owned cars now. “We will be using the same showrooms, the same manpower for this. We have an internal target of 10 percent for all our
showrooms to sell pre-owned cars of the same brand from the same showroom,” Thakker said.

As of March end, promoters held 55.18 percent stake in the company and public shareholding stood at 44.82 percent. The stock has rallied over 58 percent since listing.

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