Landmark Cars Navigates GST Transition with Record Half-Yearly Performance

Landmark Cars Limited, a prominent player in India's automotive retail sector, recently unveiled its Q2 FY26 and H1 FY26 financial results, showcasing resilience and strategic agility amidst a transformative period for the industry. The quarter was significantly shaped by the introduction of GST 2.0, a pivotal tax reform that redefined market dynamics. Despite the short-term challenges posed by this transition, Landmark Cars delivered a robust performance, achieving its highest-ever half-yearly proforma revenue and net cash from operating activities. For H1 FY26, the company reported a proforma revenue of INR 3,071 crore, marking a 26.35% year-on-year growth. The reported EBITDA stood at INR 125.3 crore, with a margin of 5.5%, while reported PAT reached INR 89 crore, reflecting a substantial 134.9% year-on-year increase. This performance underscores the company's ability to adapt and thrive in a dynamic regulatory and market environment.

The company's revenue streams are primarily driven by vehicle sales, including new, pre-owned, and agency sales, which contributed approximately 84.14% to the H1 FY26 proforma revenue, totaling INR 2,584 crore. The after-sales service and spare parts segment accounted for the remaining 15.86%, with a revenue of INR 487 crore. This diversified revenue mix, while heavily skewed towards vehicle sales, highlights the importance of both segments to the company's overall financial health. The growth in vehicle sales was particularly strong, registering a 30.11% year-on-year increase in H1 FY26, demonstrating robust demand despite market uncertainties. The after-sales segment also grew by 9.19% year-on-year, showcasing steady performance.

Navigating the GST Transition and Market Dynamics

The GST 2.0 reforms, particularly the abolition of compensation cess, presented a complex scenario for auto dealers. Buyers deferred purchases in anticipation of better pricing, leading to a temporary slowdown in sales between mid-August and late September. Landmark Cars, however, adopted a proactive strategy to liquidate inventory with cess credit, implementing selective discounting and incentive schemes. This move, while temporarily impacting gross margins, successfully minimized the company's overall cess liability to mid-single digit crores, mitigating potential financial risk. Management noted that without this proactive liquidation, gross profit margins would have been higher, but the strategic decision was crucial for risk management.

Post-GST implementation, the market witnessed a significant rebound. October 2025 recorded a double-digit growth in passenger car sales, reaching an unprecedented 5.5 lakh units. This surge was primarily driven by the reduction in GST rates across all ICE cars and favorable interest rates, signaling a robust demand environment. The company anticipates this positive momentum to continue, fueled by a strong product pipeline from its OEM partners, upcoming festive seasons, and year-end demand. Management expects gross profit percentages to increase by over 100 basis points for the remainder of the year, returning to at least Q1 FY26 levels or beyond.

Strategic Expansion and Future Outlook

Landmark Cars continues its strategic expansion, strengthening its partnerships and operational footprint. In Q2 FY26, the company operationalized two KIA workshops in Hyderabad and commenced Mercedes-Benz operations in Patna. In October 2025, the Kolkata outlet for MG Select also became operational. Further expansion includes new small sales outlets for KIA in Hyderabad and Kolkata, and a Mahindra sales outlet in Hyderabad, all expected to be operational in November. While new outlets initially operate at lower margins due to fixed costs and lower service contribution, they are expected to contribute positively and breakeven by Q3 FY26.

OEM partners are also driving future growth. Honda has announced aggressive plans for India, aiming for a fivefold increase in volumes over the next five years and a tenfold increase in ten years. This includes launching 10 new models by 2030, with a strong emphasis on SUVs, hybrids, and electric vehicles. BYD, another key partner, is experiencing robust demand for its models like the Atto 3 and Sealion 7, with Landmark Cars being its largest contributor. Discussions are ongoing regarding potential local assembly of BYD cars, which could further reduce prices and boost sales. These initiatives, coupled with a disciplined inventory management strategy that keeps Landmark's inventory days significantly lower than the industry average, position the company for sustained growth.

Concluding Thoughts

Landmark Cars Limited's Q2 FY26 and H1 FY26 performance reflects a company adept at navigating complex market transitions while maintaining a clear focus on strategic growth. The proactive management of cess liability, coupled with robust demand post-GST reduction and aggressive OEM product pipelines, provides a strong foundation for future performance. As new outlets mature and contribute fully, and as the Indian automotive market continues its growth trajectory, Landmark Cars is well-positioned to capitalize on these opportunities, aiming for sustained profitable growth in the years to come. The company's disciplined execution and strategic foresight reinforce investor confidence in its long-term vision.