Reviews

In this edition, we have reviewed Landmark Cars Ltd. and Lincoln Pharmaceuticals Ltd. We suggest our readerinvestors to HOLD Landmark Cars Ltd. and Lincoln Pharmaceuticals Ltd. 

We had recommended Landmark Cars Ltd. in Volume 39, Issue No. 3 dated January 1, 2024 — January 14, 2024, under the ‘Cover Story’ segment. The recommended price for the stock was ₹784. We had recommended the stock based on significant growth from new brands, a strategic focus on cost rationalisation, and operational optimisation. Landmark Cars is a leading Indian premium automotive retail business, with dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault. 

Established in 1998, it operates across the automotive retail value chain, including sales of new vehicles, after-sales service, pre-owned passenger vehicle sales, and third-party financial and insurance product sales. In Q4FY24, on a consolidated basis, its revenue increased by 1.19 per cent YoY to ₹863.97 crore compared to ₹853.8 crore from the previous year’s same quarter. On a sequential basis, the revenue decreased by 9.93 per cent. The PBIDT excluding other income decreased by 11.99 per cent to ₹53.52 crore YoY as compared to ₹60.81 crore from the previous year’s same quarter, while sequentially decreasing by 17.96 per cent. Its net profit stood at ₹10.97 crore compared to ₹24.26 crore, a YoY decrease of 54.77 per cent, while sequentially decreasing by 40.62 per cent from ₹18.48 crore. 

At TTM, the shares of Landmark Cars are trading at a PE of 42.9 times, which is higher than its three-year median PE of 37.8 times, whereas the industry PE stands at 53.3 times. If we look at its PBV, it is currently at 4.63 times, which is lower than the industry PBV of 4.88 times. The company has a three-year average return on equity (ROE) of 20 per cent and a return on capital employed (ROCE) of 17.1 per cent. The company plans to open 24 new outlets in FY25, with an investment of ₹75 crore. The goal is to increase proforma turnover by 20 per cent from these outlets. 

The company is also focusing on cost-saving measures and strategic deployment in less frothy market conditions. The company is diversifying its brand portfolio with premium brands like Kia, Mahindra & Mahindra and MG. It is looking for a ROCE of above 20 per cent for new dealership investments. The company is optimistic about the future business environment post-election results and is confident about its growth trajectory. Growth triggers include significant upward movement from new brands like BYD, Mahindra, Kia and MG, and double-digit growth in Mercedes-Benz sales. Hence, we recommend HOLD. 

We had recommended Lincoln Pharmaceuticals Ltd. in Volume 39, Issue No. 3 dated January 1, 2024 — January 14, 2024, under the ‘Cover Story’ segment. The recommended price for the stock was ₹619.55. We had recommended the stock based on expansion plans, capital expenditure, and focus on export. Established in 1979, Lincoln Pharmaceuticals is a public limited company with a large shareholder base, including medical fraternity members. The company manufactures and markets affordable therapeutic products, including tablets, capsules, injectables, syrups and ointments. 

The manufacturing facilities are located near Ahmedabad, covering 30,000 square metres. The company has an ultramodern laboratory with state-of-the-art equipment for in-house quality assurance. 

In Q1FY25, on a consolidated basis, the revenue increased by 8.6 per cent YoY to ₹147.28 crore compared to ₹135.62 crore from the previous year’s same quarter. On a sequential basis, its revenue increased by 3.36 per cent. The PBIDT excluding other income increased by 9.72 per cent to ₹22.73 crore YoY as compared to ₹20.72 crore from the previous year’s same quarter, while sequentially increasing by 23.66 per cent. Its net profit stood at ₹23.67 crore compared to ₹19.01 crore, a YoY increase of 24.5 per cent, while sequentially increasing by 27.29 per cent from ₹18.6 crore. 

At TTM, the shares of Lincoln Pharmaceuticals Ltd. are trading at a PE of 14 times, which is higher than its three-year median PE of 10.8 times, whereas the industry PE stands at 27.2 times. If we look at its PBV, it is currently at 2.34 times, which is lower than the industry PBV of 3.85 times. The company has a three-year average return on equity (ROE) of 16.6 per cent and a return on capital employed (ROCE) of 22.8 per cent. 

The company plans to invest ₹25-26 crore in the current year and ₹30 crore in the next year, with a 15-18 per cent annual growth rate. It focuses on segments like dermatology, cardiac, diabetic and ENT in the domestic market and plans to increase the number of MRs to 750-800 in the next two years. It plans to export to 60 countries, commercialise products in Canada, and expand into regulated markets like Europe and Australia. The company plans to target both domestic and export markets with new products and is open to investor visits for factory tours. Hence, we recommend HOLD.