Premium automobile retailer Landmark Cars is to make its debut on December 23, and experts do not view it as a landmark event, with most expecting it to follow the recent equity market trend of a subdued listing.
Lower-than-expected response to its public issue, weakening sentiment in the secondary market and aggressive valuations may combine to have a negative impact on the listing performance, experts said.
The market remained under pressure this month, barring intermittent rebounds, declining around 4 percent from its record high of December 1.
Landmark Cars closed its maiden public issue last week with 3.06 times subscription. Qualified institutional buyers provided the maximum support to the offer, buying 8.71 times their allotted quota, while high net-worth individuals bid 1.32 times the portion set aside for them, but the retail portion was booked 0.59 times during the December 13-15 share sale.
"Considering market mood and low interest, we expect at par or discounted listing of 5-8 percent below its issue price of Rs 506," said Prashanth Tapse, senior vice-president, research, at Mehta Equities.
He added that the grey market is also hinting at a muted show on listing day, while the show is justified on the back of high competitive business with low margins.
Currently, Landmark Cars shares are trading at a discount of 2-4 percent in the grey market, an unofficial trading platform, analysts said.
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The trend of muted listings is evident going by the recent examples of Sula Vineyards and Uniparts India, both of which started off on a weak note, partially impacted by market sentiment.
Hence, Astha Jain, senior research analyst at Hem Securities, expects a subdued listing for Landmark Cars, as does Rajnath Yadav, research analyst at Choice Broking.
Considering the demanded aggressive valuations, Yadav said he had assigned a “subscribe with caution” rating to the Landmark Cars share sale.
Incorporated in 1998, Landmark Cars has dealerships for Mercedes-Benz, Honda, Jeep, Volkswagen and Renault in India. It also caters to the commercial vehicle retail business of Ashok Leyland.
Landmark Cars has a presence across the automotive retail value chain, including sales of new vehicles, after-sales service and repairs (including sales of spare parts, lubricants and accessories), sales of pre-owned passenger vehicles and facilitation of sales of third-party financial and insurance products.
The company raised Rs 552 crore via the public issue, of which fresh issue proceeds of Rs 150 crore will be utilised for repaying debts.
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