Landmark Cars Ltd (BOM:543714) (Q1 2027) Earnings Call Highlights: Record Q1 Profit Surge and …

This article first appeared on GuruFocus.

Release Date: August 12, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Landmark Cars Ltd (BOM:543714) delivered its best-ever Q1 performance with proforma revenue growing over 22% year-on-year and profit after tax nearly doubling, driven by improved operating leverage and cost discipline.

• Electric vehicle (EV) adoption is a key growth driver, with 30% of vehicles sold by value being EVs, and the company’s analysis shows EVs generate higher after-sales revenue per vehicle due to increased road usage and higher accident repair costs.

• The company signed an industry-first MOU with Charge Zone to create a new recurring revenue stream from EV charging commissions, deepening customer engagement beyond the point of sale.

• The OEM portfolio is diversified and performing well, with Mercedes-Benz’s average selling price rising to approximately INR 79 lakh, MG Motors strengthening its premium portfolio, and new launches from Mahindra, BYD, Kia, and Honda expected to boost volumes.

• The company is strategically expanding its service capacity, including a new 50,000 square foot workshop in Mumbai, to capture the significant upside in after-sales for its newer, high-growth brands, which currently contribute only 19% to after-sales revenue versus 38% to new car sales.

Negative Points

• The luxury car market in India has seen reduced penetration relative to the overall market, with premium and mass segments growing faster, potentially limiting near-term growth for Mercedes-Benz.

• Gross margins are under pressure due to a changing brand mix, as newer OEM partnerships have different cost structures and after-sales businesses that are still in a ramp-up stage, making gross profit a less reliable metric.

• The company faces uncertainty from potential competitive threats, such as Audi’s aggressive expansion plans, which could pressure Mercedes-Benz sales, although management views competition as market-expanding.

• The demand environment is expected to be more normalized in the latter part of the year, following last year’s lumpiness from GST-related changes and pent-up demand, which could lead to less dramatic growth comparisons.

• The company is cautious about providing specific financial guidance, such as future profitability targets or detailed unit economics for the Charge Zone partnership, citing a VUCA (volatile, uncertain, complex, ambiguous) world and a desire to keep commercial terms exclusive.

Q & A Highlights

Q: How should investors view the company’s strong cash flow generation and future capital deployment opportunities?A: Sanjay Thakkar, Promoter, Chairman, and Executive Director, confirmed the business generates decent cash and noted the company increased its dividend payout last year. He stated management is in talks with OEMs entering India, existing OEMs looking to expand, and potential takeover opportunities, but emphasized they will not rush and will act on their own terms after stabilizing the platform from recent rapid expansion.

Q: What are the levers for further margin improvement in the new vehicle sales business, which has improved from 1.7% in FY25 to 2.3% now?A: Sanjay Thakkar explained that margins are a combination of market operating prices, price hikes (which help on a one-time basis), and demand exceeding supply, which reduces the need for customer freebies. He is hopeful that improving target achievements across brands will continue the upward trajectory.

Q: Is it fair to assume the company will handsomely cross its peak FY23 profits in FY28?A: Sanjay Thakkar responded cautiously, stating that in a VUCA (volatile, uncertain, complex, ambiguous) world, the company is on a trajectory to get there, provided the global environment does not experience shocks.

Q: With 77 showrooms and 64 workshops, is it fair to assume the mix will become 50/50 given the higher returns on workshops?A: Sanjay Thakkar clarified that comparing workshop numbers is misleading due to varying sizes (from 5,000 to 100,000 sq ft). He highlighted the new 50,000 sq ft Jogeshwari workshop in Mumbai, which consolidates three brands and smaller workshops, adding significant capacity. He noted after-sales capacity is being added, particularly for Mahindra, Kia, MG, and BYD, and suggested the company may disclose the number of service bays instead of workshops for better clarity.

Q: Given the higher EV contribution in new high-growth brands, will their after-sales contribution (currently 19% vs 38% in new car sales) grow faster and match the new car sales mix?A: Sanjay Thakkar agreed with the premise, stating it is a factor of capacity and critical mass. He noted that for brands like BYD and Mahindra, more capacity is being added, and once the number of cars and capacity reach critical mass, the after-sales upside will be significant.

Q: Can you elaborate on the unit economics of the new ChargeZone partnership, including revenue share and customer benefits?A: Aryaman Thakkar, Executive Director, explained that ChargeZone operates ~16,000 charging points across India and works with major OEMs. Landmark will onboard its EV customers onto the existing network, earning a recurring revenue share on customer spend over multiple years. Customers receive wallet credit redeemable at ChargeZone locations, which also helps convert more sales. Sanjay Thakkar declined to disclose specific commercial terms publicly to maintain the exclusivity of this industry-first partnership.

Q: What is the current utilization level of the after-sales service capacity, and what is the potential upside?A: Sanjay Thakkar stated that utilization varies by location and brand, making it difficult to give a single number. He emphasized Landmark’s unique approach of making asset allocation fungible across brands and geographies, resizing and reshaping workshops to utilize existing capacity before adding more.

Q: How should we view the Q-o-Q revenue decline for Mercedes-Benz, and what is the outlook?A: Sanjay Thakkar explained the business is seasonal, with the first two quarters accounting for 40% of business and the last two quarters 60%. The March quarter is always bigger than the June quarter. He noted that while the base was lower last year due to GST-related disruptions, the company has grown with Mercedes-Benz year-on-year by a big number, and the demand environment remains positive.

Q: What are the expectations for interest costs and CapEx going forward?A: Sanjay Thakkar stated borrowing costs are stable, and cash generation is happening month-on-month. CapEx guidance remains around ?50 crore for the year, with Q1 spending below the proportionate share. Excess cash will be used to repay working capital loans.

Q: Are the after-sales margins for EVs similar to ICE vehicles, given the higher revenue?A: Sanjay Thakkar confirmed the margins are similar, noting that warranty costs (which could involve high-value battery changes) were excluded from the analysis. He stated the company is taking a cautious stance, expecting EV after-sales margins to be not lower in the near term, but not necessarily higher.

Q: Why is gross margin not the right way to look at the business, and can you elaborate on the moving parts?A: Sanjay Thakkar explained that each brand has a different business model with varying margins, costs, manpower requirements, and infrastructure. The mix of sales and after-sales also varies, with newer brands having lower after-sales contributions. He emphasized that the focus should be on EBITDA, PAT, and cash profit, and offered to show a spreadsheet in a one-to-one meeting to illustrate this.

Q: How much of the 22% top-line growth was due to price hikes versus volume?A: Sanjay Thakkar estimated that price hikes contributed around 3%, with the remaining ~19% coming from volume growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.