Why is Landmark Cars Ltd falling/rising?

Recent Price Movement and Market Comparison

Landmark Cars Ltd has experienced a notable decline in its share price over multiple time horizons. In the last week alone, the stock has fallen by 4.91%, contrasting sharply with the Sensex’s modest gain of 0.13% during the same period. Over the past month, the stock’s decline deepened to 10.73%, while the benchmark index dipped only 0.66%. The year-to-date performance is particularly concerning, with the stock losing 23.25% against the Sensex’s robust 8.83% gain. Over the last year, Landmark Cars has underperformed significantly, delivering a negative return of 19.80% compared to the Sensex’s positive 8.37%.

Despite the recent price weakness, the stock marginally outperformed its sector on the day, rising 0.6% relative to peers. However, this small outperformance is overshadowed by the stock’s position below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained bearish trend.

Fundamental Weaknesses Weighing on the Stock

The company’s financial fundamentals have been under considerable strain, contributing to the stock’s decline. Landmark Cars has recorded a negative compound annual growth rate (CAGR) of 11.76% in operating profits over the past five years, indicating deteriorating core business performance. This weak growth trajectory is compounded by a high Debt to EBITDA ratio of 3.30 times, reflecting a significant debt burden that limits the company’s ability to service its obligations comfortably.

Profitability metrics also paint a bleak picture. The average Return on Equity (ROE) stands at a modest 5.16%, signalling low efficiency in generating profits from shareholders’ funds. The company’s recent quarterly results for September 2025 further underscore these challenges, with profit after tax (PAT) plummeting by 78.7% to ₹1.19 crore compared to the previous four-quarter average. Additionally, profit before tax excluding other income (PBT less OI) hit a low of ₹-4.29 crore, while non-operating income accounted for an outsized 803.28% of PBT, suggesting reliance on irregular income streams rather than core operations.

Valuation and Investor Sentiment

From a valuation standpoint, Landmark Cars carries a return on capital employed (ROCE) of 6.9%, which, coupled with an enterprise value to capital employed ratio of 2.1, suggests the stock is relatively expensive despite trading at a discount to its peers’ historical averages. This valuation disconnect may reflect market scepticism about the company’s ability to improve profitability and growth prospects.

Investor confidence appears to be waning, as evidenced by a 1.75% reduction in promoter shareholding over the previous quarter, bringing their stake down to 49.81%. Such a decrease often signals diminished faith in the company’s future performance and can exacerbate negative sentiment among other shareholders.

Over the longer term, Landmark Cars has underperformed key indices such as the BSE500 across multiple periods, including the last three years, one year, and three months. This sustained underperformance highlights the company’s struggles to keep pace with broader market gains and sector peers.

Trading Activity and Liquidity

Despite the negative price trend, investor participation has increased recently. Delivery volume on 24 December surged by 81% to 1.14 lakh shares compared to the five-day average, indicating heightened trading interest. The stock’s liquidity remains adequate for trades up to ₹0.12 crore based on 2% of the five-day average traded value, ensuring that investors can transact without significant market impact.

Conclusion

In summary, Landmark Cars Ltd’s share price decline as of 26 December is primarily driven by weak long-term fundamentals, including declining operating profits, poor profitability ratios, and a heavy debt load. The company’s disappointing quarterly results and reliance on non-operating income further undermine confidence. Coupled with reduced promoter holdings and sustained underperformance relative to market benchmarks, these factors have weighed heavily on investor sentiment, resulting in the stock’s persistent downward trend. While recent trading volumes suggest some renewed interest, the overall outlook remains cautious given the company’s financial challenges and valuation concerns.

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