Landmark Cars Ltd IPO - 7 things to know
Landmark Cars Ltd, an automobile dealership chain, had filed its draft red herring prospectus (DRHP) in mid-January 2021 and SEBI is yet to give its observations and approval for the IPO.
Normally, the IPOs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has. The approval is expected either towards the end of March or in April.
The Landmark Cars Ltd IPO will be a combination of a fresh issue and an offer for sale but the next step will be for the company to finalize on its issue date and issue price once the IPO approval from SEBI is received so that the IPO process can actually start.
7 important things to know about the Landmark Cars Ltd IPO
1) Landmark Cars Ltd has filed for an IPO with SEBI and is currently awaiting SEBI approval to go ahead with the IPO. The IPO comprises of a fresh issue of Rs.150 crore and an offer for sale of Rs.612 crore taking the total issue size to Rs.762 crore.
However, since the price band or the granular details like the number of shares offered and final value are not yet known. The IPO of the company may mostly wait till the LIC IPO is through to avoid too much of capital lock up in the market.
2) Let us talk about the offer for sale (OFS) portion of the IPO first. A total of Rs.612 crore worth of shares will be sold by the promoters and the early investors as part of the offer for sale. The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS.
However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock. The main sellers in the Rs.612 crore OFS include TPG Capital Growth II SF PTE Ltd Rs.400 crore, Sanjay Karsandas Thakkar HUF Rs.62 crore, Aastha Ltd up to Rs.120 crore and Garima Misra up to Rs.30 crore.
3) The fresh issue portion of Rs.150 crore will comprise of issue of fresh shares in the quantum based on the total price of the offer as decided. Let us not look at how the funds raised via fresh issue will be utilized by Landmark Cars Ltd.
Out of the public issue of Rs.150 crore of fresh issue of share, nearly Rs.120 crore will be allocated towards repayment and prepayment of debt of the company. The balance portion will be used by the company for general corporate purposes.
4) The issue also includes a portion of the IPO that will be set aside for reservation to the employees of Landmark Cars Ltd. In addition, the company also plans to explore the possibility of a pre-IPO placement, in which case, the size of the IPO would be reduced proportionately to the extent of the pre-IPO placement done.
For the financial year ended FY21, Landmark Cars recorded net profit of Rs.11.15 crore on total revenues of Rs.1,966 crore in FY21. This entails net margins of less than 1% but that is the trend in this retail business. However, in the six months to Sep-21, Landmark Cars clocked net profits of Rs.27.95 crore on revenue of Rs.1,420 crore implying higher NPM of 1.97%
5) Landmark Cars, which has had TPG as an early backer, is a premium automotive retail player in India having dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault.
Landmark Cars has a robust presence across the entire automotive retail value chain including sales of new vehicles, sales of pre-owned cars, after-sales service, repairs, sale of accessories, lubricants etc.
6) In terms of gross volume numbers, Landmark dealerships sold a total of 1,133 Mercedes vehicles in FY21, apart from over 4,000 vehicles of Honda and Renault.
Overall, if you consider till date, the company sold over 1.3 lakh cars across the entire gamut of brands. To make the best of the EV race, Landmark Cars has also forayed into a partnership with global EV leader, BYD, to sell the MP6 Electric Vehicle brand in Mumbai and Delhi-NCR.
7) The IPO of Landmark Cars Ltd will be lead managed by Axis Capital and ICICI Securities. They will act as the book running lead managers or BRLMs to the issue. The company is proposed to be listed on the NSE and on the BSE.
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