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ICICI Securities Report
Landmark Cars Ltd. Ebitdam, at 5.8%, was down 40 basis points QoQ (our estimate: 6.3%), with overhead expenses pertaining to new store addition rising and some margin impact from executing lower wholesales to bring down inventory levels.
Landmark Cars revenue from new outlets in Q1 was ~8% of total, at Rs 910 million (proforma), which operated at negative Ebitdam. We believe the impact on margins from new store addition would linger a few more quarters.
Accordingly, we reduce our FY25/FY26 margin estimates by 60 basis points/30 basis points, but retain our revenue estimates.
Maintain 'Add' with a revised discounted cash flow-based target price of Rs 641 (earlier Rs 757), implying ~20 times FY26E earning per share.
Change in target price is due to 19%/8% lower FY25E/FY26E earning per share and valuation rollover.
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