Auto Dealer IPOs in India offer investors opportunities to participate in the growing automobile retail sector. These IPOs support companies like Landmark Cars Limited and Popular Vehicles & Services Limited in expanding operations and strengthening their market presence.
Content:
- Overview of the Auto Dealer IPOs in India
- IPO Fundamental Analysis
- IPO Financial Analysis
- Landmark Cars Limited
- About the Company
- Advantages of Investing in Auto Dealer Sector IPOs
- Disadvantages of Investing in Auto Dealer Sector IPOs
- Role of the Auto Dealer Industry in the Economy
- How to invest in Auto Dealer IPOs?
- Future Outlook of Auto Dealer IPOs in India
- Auto Dealer IPOs in India – FAQ
Overview of the Auto Dealer IPOs in India
Auto Dealer IPOs in India reflect the growth potential of the automobile retail sector, driven by rising demand for passenger, commercial, and electric vehicles. Companies like Landmark Cars and Popular Vehicles leverage IPOs to enhance operations and expand networks.
These IPOs provide investment opportunities aligned with India’s evolving automotive market, supporting dealership expansion and service quality improvements. Investors benefit from exposure to a sector integral to transportation and infrastructure, contributing significantly to the country’s economic development.
IPO Fundamental Analysis
Popular Vehicles & Services Limited
Popular Vehicles & Services Limited’s financial results for FY24 show steady growth, with total sales increasing to ₹5,616 crore, and net profit rising to ₹76 crore from ₹64 crore in FY23. Their OPM remains consistent at 5%, with significant improvement in reserves.
Revenue Trend: Revenue has increased consistently from ₹3,466 crore in FY22 to ₹5,616 crore in FY24. Expenses also grew from ₹3,303 crore in FY22 to ₹5,357 crore in FY24, showing the company’s expansion and operational scale.
Equity and Liabilities: The company’s equity capital remained stable at ₹13 crore in FY22 and ₹14 crore in FY24. Reserves surged from ₹267 crore in FY22 to ₹639 crore in FY24. Borrowings also increased from ₹756 crore in FY22 to ₹925 crore in FY24.
Profitability: Operating profit rose from ₹163 crore in FY22 to ₹259 crore in FY24, with a stable operating profit margin (OPM) of 5%. Net profit also grew from ₹34 crore in FY22 to ₹76 crore in FY24, reflecting improved business performance.
Earnings Per Share (EPS): EPS fluctuated, with ₹26.84 per share in FY22, rising to ₹51.07 per share in FY23 but dropping to ₹10.69 in FY24. The drop in EPS for FY24 is mainly due to higher interest payments and depreciation costs.
Return on Net Worth (RoNW): RoNW remained strong at 14.4% in FY24, indicating a solid return compared to the company’s net equity. Despite a dip in EPS, the company maintained healthy returns on net worth.
Financial Position: Total assets increased from ₹1,268 crore in FY22 to ₹1,959 crore in FY24. This growth was driven by higher fixed assets and investments. Liabilities also rose from ₹1,268 crore in FY22 to ₹1,959 crore in FY24, reflecting increased borrowings.
Landmark Cars Limited
Landmark Cars Limited’s financial results for FY24 show a slight dip in sales, totalling ₹3,288 crore compared to ₹3,382 crore in FY23. However, operating profit remained strong at ₹219 crore, and the net profit stood at ₹57 crore, slightly lower than ₹85 crore in FY23.
Revenue Trend: Landmark Cars saw steady growth from ₹2,977 crore in FY22 to ₹3,382 crore in FY23, but sales decreased to ₹3,288 crore in FY24. This reflects a marginal dip in the company’s overall sales growth.
Equity and Liabilities: The company’s equity capital increased from ₹18 crore in FY22 to ₹21 crore in FY24. Reserves surged from ₹229 crore in FY22 to ₹518 crore in FY24. Borrowings rose from ₹476 crore in FY22 to ₹627 crore in FY24.
Profitability: Operating profit grew from ₹176 crore in FY22 to ₹238 crore in FY23 and remained at ₹219 crore in FY24. The operating profit margin (OPM) improved from 6% in FY22 to 7% in FY23 and FY24.
Earnings Per Share (EPS): EPS declined from ₹21.32 per share in FY23 to ₹13.56 per share in FY24, with a dip from ₹17.88 in FY22. The decline in FY24 EPS is attributed to lower profit despite consistent operating performance.
Return on Net Worth (RoNW): RoNW stood at 11.7% in FY24, a slight decrease from previous years. This suggests a stable return on the company’s equity despite challenges in net profit growth.
Financial Position: Landmark Cars’ total assets increased from ₹1,085 crore in FY22 to ₹1,549 crore in FY24. Liabilities also rose, from ₹1,085 crore in FY22 to ₹1,549 crore in FY24, reflecting higher borrowings and increased operational scale.
IPO Financial Analysis
Popular Vehicles & Services Limited
| FY 24 | FY 23 | FY 22 | |
| Sales | 3,288 | 3,382 | 2,977 |
| Expenses | 3,069 | 3,144 | 2,800 |
| Operating Profit | 219 | 238 | 176 |
| OPM % | 7% | 7% | 6% |
| Other Income | 5 | 4 | 11 |
| Interest | 53 | 51 | 35 |
| Depreciation | 101 | 87 | 70 |
| Profit Before Tax | 70 | 104 | 82 |
| Tax % | 18% | 18% | 20% |
| Net Profit | 57 | 85 | 66 |
| EPS | 13.56 | 21.32 | 17.88 |
| Dividend Payout % | 11% | 11% | 0% |
All values in ₹ Cr.
Landmark Cars Limited
| FY 24 | FY 23 | FY 22 | |
| Sales | 1,353 | 1,227 | 1,293 |
| Expenses | 592.2 | 521.62 | 473.34 |
| Operating Profit | 760.99 | 704.99 | 819.63 |
| OPM % | 46.39 | 52.08 | 58.19 |
| Other Income | 287.39 | 127.1 | 115.56 |
| Interest | 5.63 | 3.9 | 4.86 |
| Depreciation | 34.6 | 34.33 | 35.62 |
| Profit Before Tax | 1,008 | 793.86 | 894.7 |
| Tax % | 22.59 | 24.88 | 24.81 |
| Net Profit | 780.36 | 596.38 | 672.77 |
| EPS | 27.09 | 20.71 | 23.36 |
| Dividend Payout % | 49.83 | 49.49 | 49.02 |
All values in ₹ Cr.
About the Company
Popular Vehicles & Services Limited
Popular Vehicles & Services Limited, founded in 1983, operates a diverse automobile dealership business across India. It offers a range of services, including new and pre-owned vehicle sales, servicing, spare parts distribution, driving schools, and third-party financial and insurance products.
With an extensive network of showrooms, service centres, and retail outlets, Popular Vehicles operates across multiple states. The company serves various segments, including passenger, commercial, and electric vehicles, achieving significant growth in both revenue and profit, with a total income of ₹48.93 billion in FY 2023.
Landmark Cars Limited
Landmark Cars Limited, established in 1998, is a leading premium automotive retailer in India, with dealerships for brands like Mercedes-Benz, Honda, Jeep, Volkswagen, and Renault. The company also serves the commercial vehicle market with Ashok Leyland dealerships and offers a wide range of services.
With a strong presence across 31 cities and 8 states, Landmark Cars operate 112 outlets, including 61 sales showrooms and 51 after-sales service centers. Their business model covers new vehicle retail, servicing, spare parts sales, pre-owned vehicle sales, and third-party finance and insurance products.
Advantages of Investing in Auto Dealer Sector IPOs
The main advantages of investing in Auto Dealer Sector IPOs include access to a growing market, brand recognition, revenue stability, and expansion opportunities. These IPOs often reflect robust demand for vehicles, with established companies offering comprehensive services, ensuring long-term growth potential for investors.
- Access to a Growing Market: The auto dealership sector benefits from rising consumer demand for both personal and commercial vehicles. Investors can capitalize on the growth of the automotive market, driven by economic expansion, increasing urbanization, and rising middle-class incomes.
- Strong Brand Recognition: Auto dealer IPOs often involve companies that represent globally renowned vehicle brands. With these strong brand associations, companies can benefit from brand loyalty, ensuring continued demand for vehicles and after-sales services, translating into sustained revenue streams.
- Revenue Stability: Auto dealerships typically generate revenue from various streams, including new vehicle sales, pre-owned vehicle sales, parts, services, and insurance. This diversified income structure offers financial stability, mitigating risks related to market fluctuations and ensuring steady long-term returns.
- Expansion Opportunities: Many auto dealer companies are focused on expanding their network of showrooms, service centres, and retail outlets. As they grow into new regions or expand their product offerings, investors stand to benefit from the resulting market share gains and enhanced growth prospects.
Disadvantages of Investing in Auto Dealer Sector IPOs
The main disadvantages of investing in Auto Dealer Sector IPOs include high competition, market sensitivity, operational challenges, and regulatory risks. These factors can impact profitability and cause fluctuations in stock performance, making it crucial for investors to consider these risks before investing.
- High Competition: The auto dealership sector is highly competitive, with several players vying for market share. New entrants and established companies may experience pressure on margins and pricing, leading to potential volatility in stock performance and profitability.
- Market Sensitivity: The automotive sector is closely tied to economic cycles, consumer sentiment, and fuel prices. Any downturn in the economy or changes in consumer preferences can lead to a decline in vehicle sales, negatively affecting auto dealer IPO performance.
- Operational Challenges: Auto dealerships often face significant operational challenges, including inventory management, maintenance costs, and customer service demands. Any operational inefficiencies or disruptions, such as supply chain issues, can reduce profitability and affect investor returns.
- Regulatory Risks: The auto dealership sector is subject to stringent regulations related to emissions, safety standards, and other industry-specific laws. Regulatory changes can result in increased costs or operational hurdles, potentially affecting a dealership’s ability to perform and impacting stock prices.
Role of the Auto Dealer Industry in the Economy
The auto dealer industry plays a key role in economic development by generating employment, driving consumer spending, and contributing to national GDP. It stimulates demand for vehicles, parts, services, and infrastructure, creating a ripple effect across other sectors.
Furthermore, auto dealers contribute to technological advancements, promote competition, and help reduce environmental impacts by selling electric vehicles. Their operations support local economies by fostering entrepreneurship and providing transportation solutions.
How to invest in Auto Dealer IPOs?
To invest in Auto Dealer Sector IPOs, follow these steps:
- Open a Demat and Trading Account: Choose a brokerage platform like Alice Blue.
- Research IPO Details: Review the company’s prospectus, pricing, and performance.
- Place Your Bid: Log in to the brokerage account, select the IPO, and bid as per your preferences.
- Monitor and Confirm Allocation: If allocated, your shares will be credited to your Demat account after listing.
Future Outlook of Auto Dealer IPOs in India
The future outlook of Auto Dealer IPOs in India looks promising, driven by a growing demand for vehicles and rapid urbanization. The shift towards electric cars, coupled with increasing middle-class income, creates the potential for higher growth and investment opportunities in this sector.
Moreover, government policies favouring the automotive industry, including subsidies for electric vehicle sales, support long-term growth. As Indian consumers increasingly demand premium vehicles, auto dealers are poised to benefit. The expanding digitalization of car sales will also enhance the industry’s competitiveness and sustainability.
Auto Dealer IPOs in India – FAQ
An Auto Dealer IPO refers to an Initial Public Offering where companies in the automobile dealership sector offer shares to the public for the first time. This process allows these businesses to raise capital for expansion, operations, and growth while providing investors an opportunity to buy into the sector.
Major auto dealer companies in India that have launched IPOs include Popular Vehicles & Services Limited and Landmark Cars Limited. These companies operate large networks of vehicle dealerships and offer various services, including vehicle sales, after-sales support, and spare parts distribution.
Auto Dealer IPOs are significant in the Indian stock market as they offer investors an opportunity to tap into the growing automotive retail sector. They help dealerships raise capital for expansion, boost liquidity, and foster greater market participation, contributing to the overall market depth.
The largest Auto Dealer IPO in India was Landmark Cars Limited’s IPO. This IPO raised significant capital, reflecting the company’s prominent position in the automotive retail industry. Landmark operates multiple dealerships and provides both new and pre-owned vehicles, after-sales services, and spare parts.
To invest in Auto Dealer IPOs, you can open a trading account with a stock brokerage platform like Alice Blue. Through the platform, you can apply for IPO shares during the offer period, manage your investments, and track the performance of the IPO.
Auto Dealer IPOs can be suitable for long-term investment if the underlying companies show strong fundamentals, market presence, and growth potential. Before committing to such investments, assessing financial health, industry trends, and management efficiency is essential.
Auto Dealer IPOs can be profitable for investors, offering opportunities to benefit from India’s expanding automobile sector. Profitability depends on company performance, market demand, and growth potential. Careful evaluation of financials and industry trends is crucial.
Currently, there are no specific details about upcoming auto dealer IPOs in India. However, it is advisable to stay updated through trusted platforms like NSE, Band SE, or brokerage platforms such as Alice Blue.
Detailed reviews and analyses of auto dealer IPOs can be found on stock market platforms, investment blogs, and brokerage services like Alice Blue. These sources offer insights into performance, risks, and growth potential, aiding informed investment decisions.
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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.
