• AUTO Business Corporate / Business

Landmark Cars Limited’s initial public offering to open on December 13, 2022

• nationalherald
• December 8, 2022

sets price band at ₹481 to ₹506 per Equity Share

 by Prashant Kapadia/NHN

• Price band of ₹481 – ₹506 per equity share bearing face value of ₹5 each (“Equity Shares”)

• Bid/Offer Opening Date – Tuesday, December 13, 2022 and Bid/Offer Closing Date – Thursday, December 15, 2022.

• Minimum Bid Lot is 29 Equity Shares and in multiples of 29 Equity Shares thereafter.

• The Floor Price is 96.20 times the face value of the Equity Share and the Cap Price is 101.20 times the face value of the Equity Share.

• A Discount of ₹48 Per Equity Share is being offered to Eligible Employees bidding in the Employee Reservation Portion.

Risks to Investors:

• The Company had reported a loss after tax of ₹289.39 million in Fiscal 2020 and may incur additional losses in the future. This was due to the decrease in revenue of 21.51% and new vehicle sales by 24.36%, which were primarily attributable to the higher discounts offered to customers to sell entire stock of Bharat Emission Stage IV engine vehicles and effects from the COVID-19 pandemic.

• The Offer Price, market capitalization to revenue multiple and price to earnings ratio on the Offer Price of our Company and return on net worth may not be indicative of the market price of the Equity Shares on listing or thereafter.

 

Market capitalization to total income (Fiscal 2022) multiple at the upper end of Price Band (number of times)	Price to Earnings Ratio (based on Fiscal 2022 restated profit after tax for the year and on diluted EPS) at the upper end of Price Band (number of times)	Nifty Fifty P/E ratio*	Nifty Auto Index P/E ratio*	Weighted average return on networth (%)
0.67	29.00	22.47	39.03	12.51

*as on December 5, 2022

• Our return on equity ratio and return on capital employed have fluctuated in the three months ended June 30, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020. In the three months ended June 30, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, our ROE was 6.72%, 26.66%, 6.11% and (17.03%), respectively, and our ROCE was 3.67%, 18.86%, 8.59% and 1.07%, respectively. We may not be able to maintain higher ROE and ROCE in the future.

• The Company is subject to the significant influence of, and restrictions imposed by OEMs pursuant to the terms of our dealership or agency agreements. Our dealership agreements with Honda, Volkswagen, Jeep, Renault and Ashok Leyland and our agency agreement with Mercedes-Benz will expire within the next three years. Their contribution to the total Revenue from sale of cars during the three months ended June 30, 2022 and Fiscal 2022 was 77.77% and 77.40%, respectively. We may not be able to renew these agreements on attractive terms or at all which may significantly impact our revenues.

• Geographical Concentration Risk:Our business operations are concentrated in the states of Gujarat and Maharashtra. In the three months ended June 30, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, 50.32%, 50.64%, 52.41% and 52.25% of our number of new vehicles sold and 49.41%, 48.77%, 50.77% and 47.87% of our total consolidated revenue from sale of cars was derived from dealership operations in Gujarat and 22.59%, 24.50%, 24.61% and 23.60% of our vehicle sales and 20.88%, 25.54%, 23.47% and 25.12% of our total consolidated revenue was derived from dealership operations in Maharashtra.

• Competition Risk: Most of our dealership agreements do not grant us the exclusive right to sell vehicles manufactured by the OEMs within a given geographic area. We may not be able to expand into new territories where other dealers have exclusive dealerships.

• The weighted average cost of acquisition of all Equity Shares transacted in the three years preceding the date of the Red Herring Prospectus is as follows:

Past transactions	Weighted average cost of acquisition per Equity Share (in ₹)	Lower End of the “Price Band” with “Floor Price” (₹ 481) is ‘X’ times the Weighted average cost of acquisition	Upper End of the “Price Band” with “Cap Price” (₹ 506) is ‘X’ times the Weighted average cost of acquisition
Last 3 years	149.85^	3.21	3.38

^ The weighted average cost of acquisition has been calculated in the table above after giving effect to the sub-division of the face value of the equity shares of the Company from ₹10 each to ₹5 each.

• Average cost of acquisition of Equity Shares held by the Selling Shareholders ranges from ₹ 3.30 to ₹ 137.42 per Equity Share and Offer Price at upper end of the Price Band is ₹ 506 per Equity Share.

• The weighted average cost of acquisition of all Equity Shares transacted in the three years preceding the date of the Red Herring Prospectus is as follows:

Past transactions	Weighted average cost of acquisition per Equity Share (in ₹)	Lower End of the “Price Band” with “Floor Price” (₹ 481) is ‘X’ times the Weighted average cost of acquisition	Upper End of the “Price Band” with “Cap Price” (₹ 506) is ‘X’ times the Weighted average cost of acquisition
TPG GROWTH II SF PTE. LTD.	137.42	3.50	3.68
AASTHA LIMITED	9.36	51.39	54.06
SANJAY KARSANDAS THAKKER HUF	3.30	145.76	153.33
GARIMA MISRA	3.30	145.76	153.33

The two BRLMs associated with the Offer have handled 68 public issues in the past three years, out of which 23 issues closed below the Offer Price on listing date.

Name of BRLMs	Total Issues	Issues closed below IPO Price on listing date
Axis Capital Limited*	21	5
ICICI Securities Limited*	24	5
Common issues of above BRLMs	23	13
Total	68	23

*Issues handled where there were no common BRLMs

Mumbai, December 08, 2022: Landmark Cars Limited (the “Company”), a leading premium automotive retail business in India with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen, and Renault has fixed the price band at ₹481 to ₹506 per equity share for its initial public offer. The initial public offering (“IPO” or “Offer”) of the Company will open on Tuesday, December 13, 2022, for subscription and will close on Thursday, December 15, 2022. Investors can bid for a minimum of 29 Equity Shares and in multiples of 29 Equity Shares thereafter.

The public issue of equity shares bearing a face value of Rs 5 comprises a fresh issue of equity shares aggregating to Rs 150 crore and an offer for sale (OFS) of up to Rs 402 crore by existing shareholders.

The Company, otherwise known as Group Landmark, has a presence across the automotive retail value chain, which includes sale of new vehicles (passenger as well as commercial), after-sales service and repairs (including sales of spare parts, lubricants and accessories) and sales of pre-owned passenger vehicles. As a value add-on to its passenger vehicle sales, it also facilitates sale of third-party financial products including insurance policies and vehicle finance through its dealerships.

Axis Capital Limited and ICICI Securities Limited are the Book Running Lead Managers and Link Intime India Private Limited is the registrar to the Offer. The equity shares are proposed to be listed on BSE Limited and National Stock Exchange of India Limited.

In case of any revision in the Price Band, the Bid/Offer Period will be extended by at least three additional Working Days after such revision in the Price Band, subject to the Bid/Offer Period not exceeding 10 Working Days. In cases of force majeure, banking strike or similar circumstances, the Company and the Selling Shareholders may, for reasons to be recorded in writing, extend the Bid /Offer Period for a minimum of three Working Days, subject to the Bid/Offer Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges, by issuing a press release, and also by indicating the change on the respective websites of the BRLMs and at the terminals of the members of the Syndicate and by intimation to Designated Intermediaries and the Sponsor Banks, as applicable. This Offer is being made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”) read with Regulation 31 of the SEBI ICDR Regulations and in compliance with Regulation 6(1) of the SEBI ICDR Regulations wherein not more than 50% of the Net Offer shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (the “QIB Portion”), provided that the Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis (“Anchor Investor Portion”). One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from the domestic Mutual Funds at or above the Anchor Investor Allocation Price in accordance with the SEBI ICDR Regulations. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion (other than the Anchor Investor Portion) (the “Net QIB Portion”). Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Net Offer shall be available for allocation to Non-Institutional Investors (“Non-Institutional Portion”) of which one-third of the Non-Institutional Portion shall be available for allocation to Bidders with an application size of more than ₹ 200,000 and up to ₹ 1,000,000 and two-thirds of the Non-Institutional Portion shall be available for allocation to Bidders with an application size of more than ₹1,000,000 and under-subscription in either of these two sub-categories of Non-Institutional Portion may be allocated to Bidders in the other sub-category of Non-Institutional Portion in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. Further, not less than 35% of the Net Offer shall be available for allocation to Retail Individual Investors (“Retail Investor Portion”) in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. Further, Equity Shares will be allocated on a proportionate basis to Eligible Employees applying under the Employee Reservation Portion, subject to valid Bids received from them at or above the Offer Price. All Bidders, other than Anchor Investors, are required to participate in the Offer by mandatorily utilising the Application Supported by Blocked Amount (“ASBA”) process by providing details of their respective ASBA Accounts, and UPI ID in case of UPI Bidders using the UPI Mechanism, if applicable, in which the corresponding Bid Amounts will be blocked by the Self Certified Syndicate Banks (“SCSBs”) or by the Sponsor Banks under UPI Mechanism, as the case may be, to the extent of respective Bid Amounts. Anchor Investors are not permitted to participate in the Offer through the ASBA process. For details, see “Offer Procedure” on page 419 of the RHP.