Here’s why we think Landmark Cars is a good investment:
- Big Market Opportunity: Landmark Cars are worth 3000 crore right now, but they can become much more valuable because the luxury car market in India has a lot of potential to grow.
- More People Can Buy Expensive Cars: As people in India earn more money and want nicer things, more of them will buy cars that cost over Rs 15 lakh. New electric vehicles from companies like MG Motor and Mahindra & Mahindra will also help Landmark Cars make more money starting from 2025.
- Better Earnings Ahead: In the second quarter, Landmark Cars earned Rs 5 per share and had a debt of Rs 400 crore. We expect their earnings per share to increase soon, especially from 2025. The company is working to reduce its debt, which is mainly to fund day-to-day operations.
- Good Investment Value: Right now, Landmark Cars’ stock is trading at 25 times its predicted earnings for 2025. We believe the company can consistently increase its earnings by 25% each year, with good returns on investment and a strong business in services after selling a car, which has high profit margins and is reliable.
Growth and Earnings Potential:
- Similar to a Successful Company: Just like Trent, a company that did well by moving from unorganised to organised retail and saw its stock price double in six months, Landmark Cars has a similar opportunity for growth.
- Comparison with China: India sold 38,000 luxury cars last year, while China sold 20 lakh (50 times more). Out of India’s sales, Mercedes Benz sold 16,000 cars, and Landmark Cars sold 2,500 of these, which is 15% of Mercedes’ total sales in India.
- Big Potential in a Small Market: Compared to the huge potential of the luxury car market, Landmark’s current market value of Rs 3200 crore seems small.
- Earnings are Key: The best time to invest is when a company’s earnings are about to jump. Landmark Cars is at this point now because they had some issues with supply and new products in the first two quarters, but things are looking up with new car launches and partnerships with other car companies.
- Strong After-Sales Business: Their after-sales service is a big part of their profit and cash flow. As they sell more cars, this part of the business will grow too, which should make the company more valuable.
- Partnerships and Future Plans: Landmark Cars has good partnerships with car makers like M&M and MG Motor. The global CEO of Mercedes Benz said that new models will come to India faster because the 21st century belongs to India, and Mercedes plans to grow a lot in India due to its strong brand and the wealth in the country.
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