# 1. Financial Performance ## A. Key Figures * **Total Proforma Revenue:** **₹1,657 Cr** (Q2 FY'26) (+31% YoY) · **₹1,268 Cr** (Q2 FY'25) * **Gross Profit:** **₹196 Cr** (16.2% margin) * EBITDA: ₹59 Cr (4.9% margin) * **Cash PAT:** **₹17 Cr** (Q2 FY'26) · **Pre-IndAS Operating Cash Flow:** **₹128 Cr** (H1 FY'26) * **Depreciation:** **₹38 Cr** (Q2 FY'26) * **Finance Costs:** **₹20 Cr** (Q2 FY'26) * Interest Expense (ex-lease): ₹12 Cr (Q1 FY'26) (+14% YoY) ## B. Revenue Growth * **Record First Half Performance:** Company achieved highest-ever revenue in H1 FY'26, reflecting strong market demand and operating momentum. * **Robust Core Growth:** Existing outlets delivered **35% year-on-year revenue growth**, underscoring sustained demand and operational efficiency. ## C. Gross Margin * **Temporary Margin Pressure:** Gross margin compression driven by **one-time discounts, free accessories, and unfavorable mix** from faster-growing new car sales. * **Mercedes Segment Impact:** Margin decline largely attributable to **liquidation of demo car inventory**, now complete—indicating near-term relief from this headwind. * **Mix and Incentives Key Drivers:** Approximately **200 bps YoY margin impact** from **100 bps due to mix shift** and **100 bps from promotional discounts**. * **After-Sales Resilience:** Despite monsoon-related softness, workshop average realization improved **by ~₹1,000 QoQ to ~₹26,000**, signaling pricing strength and recovery potential. ## D. EBITDA & Profit * **Profit Growth Lagging Revenue:** Despite strong top-line expansion, EBITDA growth in existing outlets slowed to **4–5% YoY**, pressured by rising costs and margin mix. * **Cost Inflation:** Employee expenses rose **15–16% QoQ** due to new store openings, salary hikes, and sales incentives for slow-moving inventory. * **Stable Underlying Margins:** Management affirms that **core profit margins have been maintained** despite volatility, with positive trend signals. ## E. Cash Flow * **Improved Working Capital:** Lower inventory at quarter-end from active liquidation and GST timing to reduce future interest costs—indicating **tapering financing pressure**. --- # 2. Sales Volume & Mix ## A. Key Figures * **New Car Sales:** **₹1,403 Cr** proforma (+35% YoY) * Aftersales Revenue: **₹254 Cr** (+11.2% YoY) * **Per Car Service Revenue:** **>₹26,000** (Q2 FY'26) * **New Car ASP:** **just under ₹70 Lakh** (Mercedes-Benz, Q2 FY'26) · **₹23.16 Lakh** (overall, Q2 FY'26) ## B. New Car Sales * **Robust Volume Growth:** Strong double-digit new car sales growth across all OEM partners, driven by demand for premium models. * **Premiumization Trend:** Record average selling price achieved, reflecting a shift toward higher-end vehicle mix, particularly Mercedes-Benz. ## C. Aftersales Revenue * **Seasonal Timing Impact:** Aftersales revenue growth moderated due to monsoon-related delays, with flood-driven income shifting to Q3 FY'26. * **High Service Realization:** Per vehicle service revenue remained strong at over **₹26,000**, indicating resilient customer spend in the service segment. ## D. ASP Trends * **ASP as Mix Indicator:** Record overall ASP driven by premium model sales, though management notes no significant quarter-on-quarter change in underlying product mix. --- # 3. Outlet & Workshop Performance ## A. Key Figures * New Workshop Ramp-up: **No new outlets planned organically in H2** · **Only 1–2 minor inaugurations in H2** (e.g., Bhopal Mercedes-Benz) * **Service Margin Pressure:** **Declined QoQ due to mix effect from new workshops** (Mahindra, Kia, MG) operating below mature levels · **Hyderabad Kia workshop incurred 2–3 months of expenses vs. 1 month of revenue** * **Monsoon Impact:** **High-ticket repair deferrals to Q3** due to erratic monsoon patterns ## B. New Outlet Ramp-up * **Rapid Profitability Path:** Management expects full profitability across new outlets within one quarter, despite external delays. * **Pause in Organic Expansion:** No organic workshop growth planned for H2 after recent openings in Patna (Mercedes-Benz) and Hyderabad (Kia). ## C. Workshop Utilization * **Margin Drag from Immature Workshops:** Newly added workshops are diluting service margins due to lower operational efficiency, though normalization is anticipated. * **Seasonal Timing Headwinds:** Unseasonal weather disrupted monsoon-related repair cycles, deferring revenue and pressuring near-term margins. ## D. Existing Outlet Growth * **Stabilization Achieved:** MG and Mahindra outlets now performing in line with expectations, supported by strong product pipelines and **robust demand for MG Select**. * **Definition Shift & Reporting Change:** Recent reclassification of West Bengal outlets as “existing” distorts maturity metrics; company may discontinue separate reporting as portfolio matures. ## E. Expansion Plans * **Strategic, Not Organic:** Growth to be driven by **annual strategic acquisitions** and long-term consolidation plays rather than rapid organic expansion. * **Favorable Industry Tailwinds:** Expansion backed by strong sector dynamics, including **Honda’s plan to fivefold its India volumes over five years**. --- # 4. Product & OEM Partnerships ## A. Key Figures * **BYD Sales:** **1,000+ units** sold in October 2025 · **3,500 units** sold in full-year 2024 * **Mercedes-Benz Sales:** Recorded **best-ever monthly sales** in September 2025, selling **1 car every 6 minutes** during Navratri * **OEM Partnership Scale:** **One in five BYD** and **one in six Mercedes** vehicles sold in India distributed by Landmark Cars ## B. BYD Performance * **Explosive Demand Growth:** BYD sales surged to over **1,000 units in a single month**, reflecting strong consumer traction for Atto 3, Sealion 7, and eMax models. * **Supply Constraints Emerge:** Sealion demand has exceeded expectations, resulting in stock shortages with next shipments due in January 2026 and advance bookings active. * **Strategic Partnership Role:** Landmark is BYD’s largest partner in India, contributing over **20% of total sales volume**, underscoring its critical distribution leverage. * **Localization Talks Ongoing:** Discussions on local assembly via joint venture are active, though no firm commitments have been made. * **Expansion Pipeline:** Management is in active talks to expand BYD outlets, signaling confidence in long-term brand scalability. ## C. Honda Strategy * **Aggressive Product Rollout:** Honda plans **10 new model launches by 2030**, with 7 hybrid or BEV SUVs, including India-specific models for domestic and export markets. * **Volume Growth Trajectory:** Launch pace of ~2 models per year starting next fiscal, with volume acceleration expected from **2027 onwards**. * **Strategic Alignment:** As Honda’s largest partner, Landmark is well-positioned to capture upside from expanded product portfolio and premium segment push. * **Margin Profile Neutral:** Honda new car margins are in line with peers, with no notable deviation in profitability. ## D. Mercedes-Benz Sales * **Record Performance:** Mercedes achieved its highest-ever monthly sales in September 2025, driven by festive demand and Landmark’s strong execution. * **Premium Market Penetration:** Landmark accounts for **one in six Mercedes sales** in India, reinforcing its dominance in luxury vehicle distribution. ## E. Renault & Kia Updates * **Renault Growth & Pipeline:** Renault posted healthy quarterly growth and has commenced a multi-year new model launch cycle, starting with recent introduction. * **Acquisition-Led Scale:** Nearly **one-fourth of Landmark’s current scale** stems from acquisitions, highlighting a successful inorganic growth strategy. --- # 5. Demand & Market Trends ## A. Key Figures * **Passenger Car Sales (Oct):** ~500,000 units (+double digits) * **4-Wheeler Market Growth (Oct):** **12%** YoY (VAHAN data) * **Customer Inquiries (Nov):** **20%** increase YoY (first 10 days) * Landmark’s CV Market Share: 0.5% of India’s commercial vehicle sales ## B. Post-GST Demand * **Demand Deferral Observed:** Pre-GST revision uncertainty led to postponed vehicle purchases, driven by expectations of lower prices post-cess removal and dealer-level credit ambiguity. * **Resilient Core Demand:** Landmark maintained robust October sales and margin improvement with minimal reliance on incentives, reflecting underlying demand strength. * **Used Car Pressure:** Industry-wide pre-owned segment weakened due to compressed pricing versus new vehicles, though Landmark’s limited inventory mitigated exposure. ## C. Booking Momentum * **Pent-Up Demand Release:** Strong operational execution during the final September days absorbed backlog from the transition period, sustaining customer satisfaction amid peak demand. * **Sustained Sales Trajectory:** Positive momentum extended into November and December, supported by new model launches, OEM schemes, and seasonal tailwinds including weddings and rate cuts. * **Outperformance in Bookings:** November demand significantly exceeded prior-year levels, with early data indicating strong YoY growth in both bookings and registrations. ## D. Customer Inquiries * **Broad-Based Demand Uptick:** All-brand customer inquiries surged **20%** in early November, signaling strong market engagement across segments from mass-market to luxury. * **Buyer Behavior Under Review:** Management is assessing whether GST rationalization is stimulating first-time buyers or driving upgrades, with implications for long-term premiumization trends. ## E. Industry Growth * **Historical Precedent for Stimulus:** Past duty reductions—GST in 2015 (+10% swing) and excise in FY2004 (+28% growth)—highlight potential for sustained post-revision expansion. * **Structural Fragmentation Persists:** Despite growth, India’s auto retail remains highly fragmented, with ownership-model concentration limiting scale versus mature markets like U.S. and China. * **Premiumization Accelerating:** GST cuts are expected to deepen penetration in luxury segments, where price reductions are more pronounced, reinforcing the shift toward **INR 10 lakh+ average selling prices**. --- # 6. Regulatory & Tax Risks ## A. Key Figures * **Cess Liability:** **INR 5–6 Cr** (subject to Supreme Court decision) * **Cess Recovered:** **Over INR 15 Cr** during the period * **Cost to Recover Cess:** **<1%** of revenue, spread across incentives, ads, and transport discounts ## B. GST Transition Impact * **Defining Regulatory Shift:** GST rate revision and cess abolition from September 22 created short-term disruption, with management describing the quarter as a "khichadi" due to ground-level unpredictability. * **Positive Long-Term Outlook:** Simplified tax structure replaces **nearly 6 cess slabs**, enhancing clarity for global OEMs and expected to boost demand in premium segments. * **Consumer & Repair Behavior Shift:** Lower GST on spare parts (28% → 18%) improved affordability and workshop competitiveness, leading to **postponement of repairs in Q2** ahead of cost savings. ## C. Cess Recovery & Margin Impact * **Strategic Inventory Liquidation:** Company proactively sold cess-paid inventory to recover costs, pressuring gross margins; **cess credit no longer meaningful** due to sub judice status. * **Recovery Costs Broadly Distributed:** Efforts to recover cess involved minimal total cost (<1%), leveraging non-financial levers like transport and ad incentives—**no standardized discounting** applied. ## D. Legal & Sector Outlook * **Ongoing Legal Risk:** Final financial impact remains contingent on **Supreme Court ruling**; current provisions reflect conservative stance amid uncertainty. * **Sector Tailwinds Ahead:** Upcoming trade agreements and historical precedent suggest **tax reductions will catalyze strong demand growth next year**. --- # 7. Guidance & Outlook ## A. Key Figures * **Gross Margin Guidance:** **+100 bps** improvement expected in H2 FY26 ## B. Margin Recovery * **Confident Outlook:** Management views current low gross margins as a temporary aberration, guiding for a **meaningful sequential recovery** in H2 driven by operational improvements and potential aftersales mix uplift. * **Aftersales Leverage:** Ramp-up of service workshops in **Q3 and Q4** expected to support margin expansion, though exact contribution remains unquantified. * **Clarification Sought:** Analyst inquiry on whether margin guidance is versus **Q2 or H1 average** highlights need for precision in forward-looking statements. ## C. H2 Performance * **Volume Headwinds Persist:** Mercedes India has not achieved year-on-year volume growth in 2025 to date, with inflection expected only from **2026** on the back of a global product offensive. * **Demand Resilience:** Positive demand momentum expected to continue through year-end, supported by market conditions and promotions. * **Interest Cost Relief:** Further reduction in financing costs anticipated following **RBI’s December rate cut**, providing tailwind to profitability. * **Margin Normalization Timeline:** Management affirms expectation for margins to **normalize by Q3**, aligning with internal recovery trajectory. ## D. Market Expectations * **Guidance Milestone:** First-time provision of specific margin guidance reflects increased strategic transparency and internal confidence, despite sector volatility. * **Long-Term Optimism:** Leadership expresses conviction in **multi-year profitable growth** for Indian automotive, prioritizing sustainable performance over short-term fluctuations.