Earnings Call Transcript - XNSE:LANDMARK 2026-11-13

Operator

Ladies and gentlemen, good day and welcome to Landmark Cars Ltd. Q2FI 27 earnings conference call hosted by 361 Capital. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now have the conference over to Mr. Akhil Parikh from 361 Capital. Thank you, and over to you, Mr. Parikh.

Akhil Parikh, Analyst — 361 Capital

Yeah, thank you. Good morning, everyone. On behalf of 361 Capital, I welcome you all to the conference call of Landmark Cars. We have with us a management of Landmark Cars. Today, Mr. Sanjay Thakkar, promoter, chairman, and executive director. Mr. Aryabhan Thakkar, Executive Director, and Mr. Surinder Agarwal, Chief Financial Officer. I'll hand over the call to Sanjay, sir, for his opening remarks, post which we'll open the floor for Q&A session. Over to you, sir.

Sanjay Thakkar, Chairman

Thanks, Akhil, and good morning to everyone. I hope everybody has had a wonderful Diwali. On behalf of the company, I extend a warm welcome to everyone who has joined us today. And I would like to especially thank 361 Capital for hosting this call. As Akhil mentioned, I have with me Aryman Thakkar and Surendra Agarwal, our CFO, who are with me on the call. The results and the presentations are uploaded on the stock exchanges and on the company's website. I hope everybody has had a chance to look at them. The growth in the auto industry is relentless since GST 2.0 last September. The Indian PV industry, already the third largest PV market in the world, will comfortably cross the mark of 5 million vehicles this financial year. This has brought the focus of global OEs back strongly into India. In the last six months alone, Our board members of Mercedes-Benz Global, including the global CEO, visited India twice to firm up their India plans and further investments. Stellantis, Renault, and Honda have all announced big plans for India starting soon. This is also likely to come into effect early next year. This is likely to boost our business positively. Landmark is best poised to take advantage of the move towards new energy vehicles. Nearly 29% of the vehicles sold by us are new energy vehicles, which is nearly three times the industry average. BYD is launching its luxury brand Densda in India today. The initial response is overwhelming, to say the least. The investments done by the company in the last two years are bearing fruit. The new brands BYD, MG, and Mahindra today are number two, three, and four position in our revenue in terms of the PVs. In the last quarter, apart from having the highest ever EBITDA in the history of the company, we also recorded the highest ever new car sales EBITDA. The new car sales EBITDA is now 40% of the total EBITDA. We have always maintained that in our business, if well run, keeping a hawk eye on expenses both sales and service will be very profitable. The after sales business has once again proved that it is an annuity business. As our service revenue keeps on rising and reaching a record, our per service revenue has kept on rising and has reached a record rupees 30,000 plus this quarter per service. We have in our presentation shared how service revenue for EV repairs has no negative impact on our workshop business. The number for the last quarter would have been better had it not been for the disruption of business in many workshops in Gujarat in the month of August. This is a very large state-of-the-art multi-brand workshop in Yogeshwari in place of three smaller workshops in the Mumbai region. This will give us operating leverage. Includes some additional expenses on account of overlap of transition, which is normalized as we speak. In our industry, the second half of the year is generally much stronger than the first We are feeling very confident about the future sitting here today. I would now hand over to Areman to give us further insight into the business of the company.

R. Aryaman Thakkar, Other

At Landmark Cars, we continue to focus on strengthening our business relationships, expanding our offerings, and identifying new opportunities across the automotive value chain. In this context, we have made some important progress across our existing and new partnerships. Before moving to individual OEM updates, I would like to highlight a recent development in our pre-owned car business. We have signed an agreement with OLX India, part of Car Trade Tech, to develop a digital proposition that combines OLX India's industry-leading digital reach with Landmark's leadership in physical retail and service networks. We will work with digital customer journeys while our outlets will serve as physical experience centers for vehicle inspection and handover. The vehicles will be bought and sold on a revenue sharing basis and in a co-branded way. The partnership will be rolled out in phases beginning with select cities with the objective of building a scalable, profitable, And sustainable presence in the pre-owned car market, which has so far not been done in India. Our objective is to be a prominent player in the pre-owned car industry over time. Let me now take you through some of the important developments of our OEM partners and their respective businesses. Starting with Mercedes-Benz, the brand delivered a record quarter in India, achieving its highest quarterly volumes. Supported by a strong product portfolio, new launches, and sustained demand for its models. The brand has recently introduced the India-made GLC electric SUV, which has received a fantastic response with over 1,000 bookings in a short period of time, and the product being sold out till March of 2027. This is the first of the 40-plus new launches. Planned by the OEM globally. Deliveries have already started this month. We also expect improved availability of the CLAE, which has witnessed strong customer demand alongside initial supply constraints. The new S-Class and the S-Class Maybach will further strengthen the top-end vehicle portfolio and position of the brand. Moving to MG Motors, the company continues to strengthen its position in India's new energy vehicle market, with the Windsor EV remaining the highest-selling electric vehicle model in India. The recently launched Hector Tomahawk EV further broadens its electric portfolio and has received phenomenal bookings, with delivery commencing in October and likely to ramp up going forward. The Tomahawk Hybrid, which is soon to be launched, will bring another dimension to its powertrain portfolio, providing customers with an alternative mobility proposition. Mahendra continues to have a strong year, crossing 6 lakh SUV sales for the second year running. The models have been very well received, and the company has recently announced. That they will be introducing four new models till June of 2027. Together, these developments highlight Mahindra's strategy of strengthening its core SUV franchise while catering to evolving customer preferences across petrol, electric, as well as PNG vehicles. In India, they have announced a further USD 2 billion investment into India to increase production capacity and introduce new models across powertrains. The CELTOS continues to anchor its demand with most variants still in a waiting period. The Carins and the Syros EV strengthen Kia's presence in electric mobility. The new Sorento has received a strong response. with it being in a book and wait situation. During the last month, Kia has become the fifth largest OEM in India. Turning to BYD, the company is expanding its ambitions in India with the introduction of its luxury brand Denza, marking its entry into the higher-end premium mobility segment. We will be establishing their dealership in Mumbai. Two models will be launched initially, the D9 Luxury MPV and the Z9 GT. The response for both these models have been great, with them already being sold out for the next quarter, even prior to launch. The recently launched C-Line 7 Dynamic comments deliveries in the previous quarter and has received encouraging customer interest. Honda is sharpening its India growth strategy with a focus on quicker product development cycles and deeper localizations to strengthen its market presence. The updated Honda Elevate launched first in India underscores the strategic importance of the Indian market for the company. It's planned entry into the battery electric vehicle segment this year with the Alpha Zero SUV. Also marks an important step towards broadening its portfolio and addressing emerging opportunities. Landmark continues to be the largest partners for Honda in the country. Atlantis has announced a further 4,000 crore investment underlying their commitment to India. The company plans to introduce 12 new models under the Jeep and Citroen brands by 2030. They have also gotten into a partnership with Tata Motors to collaborate on vehicle technologies and platforms. Landmark has recently received the letter of intent for JSW Motors. For the markets of Ahmedabad and Bhopal, the company is heavily investing in a new production facility at Kshatrapati Chambhaji Nagar. The first product called the JSW Combat, which is based on the Jetur T2, will go on sale early during Q4 FY27. The GST cuts came into effect last October. In spite of a higher base, the festive momentum remains strong. New model launches across powertrains. Ongoing effect of the GST cuts along with the traditionally stronger H2 of the financial year should keep the industry buoyant in the future. We remain focused on continuously adapting our business model, strengthening our OEM relationships, and building capabilities to capitalize on emerging opportunities. Thank you.

Operator

Excuse me, sir. Sir, should we open the floor for the Q&A session?

Sanjay Thakkar, Chairman

Yes, please.

Operator

Thank you very much, sir. We'll now begin with the question and answer session. Anyone who wishes to ask questions, may please press star and 1 on their touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Our students are requested to use only handsets while asking our questions. Please, I'm just going to wait for a moment while the question queue assembles. You may please press star and 1 to ask questions. The first question is from the line of Vidray Pandey from Access Capital. Please go ahead.

Vijay Pandey, Analyst — Access Capital Limited

Thank you for taking my questions. A couple of questions. I wanted to check on the margin for it. So, our margin came at, sequentially, was... I just want to understand how do you see whether this margin is sustainable or not going forward? Was there some inventory gain built-in in this quarter that we may not see in the coming quarters? And secondly, on the growth expectation for upcoming years in the second half and moving into FIA. So, if you can just highlight what will be your expectation moving ahead, how do you see both in terms of volume and revenue expectation?

Sanjay Thakkar, Chairman

Yeah.

Vijay Pandey, Analyst — Access Capital Limited

I'll be brief for that.

Sanjay Thakkar, Chairman

Thanks, Vijay. So, what we are seeing in the industry today is a kind of a secular growth which is happening, though on ground we have had a great October. We believe that this momentum as of now will continue unless some very major macro event happens. We believe that this growth in the industry right now is there for the next few quarters at least. And we have entered a new uncharted zone, which, I mean, we all know that the penetration of passenger cars in India is hardly 3% or so. So, this is something which has a very long road ahead, and this looks good. You spoke about the margins. Yes, there has been... We have a significant margin improvement year on year on EBITDA level, and that is something we had kind of indicated that once the outlets kind of mature, this is kind of bound to happen, and we are happy that we have more or less reached there. And the margins would have been even higher had we not had some rain disruptions and also... The newer brands, which are selling a lot of cars, as when their after-sales does, as well as the old brands' after-sales, that we believe the margin is a sustainable thing that we have kind of delivered. The inventory, you rightly pointed out, last year the festive season was in a different quarter, so the industry itself has built. The inventory, if you look at the FATA, They have said that the industry inventory is nearly 45 days. We are at around 35 days, though our sales has also gone up, so in absolute numbers, in rupee terms, it looks higher, but this should normalize in the next two months or so.

Vijay Pandey, Analyst — Access Capital Limited

Sir, I was talking about the inventory pricing.

Sanjay Thakkar, Chairman

Yeah, so it is difficult to pinpoint as to how much extra money we made. The prices will again go up, Vijay, in the month of January. So this is something which is an ongoing thing within the industry. Thank you. But we are confident about keeping our margins where it is, as far as sales is concerned. Difficult to exactly put a number to it, but there is nothing unusual that we are seeing.

Vijay Pandey, Analyst — Access Capital Limited

And sir, can you guide us about the KPEX expectation for the year? Because I think last quarter you said around 50 crores, but we have already done 50 crore KPEX.

R. Aryaman Thakkar, Other

True.

Sanjay Thakkar, Chairman

It would be a little higher than that. You are absolutely right. This was our estimate at that time. Then JFW has come along, and so has Denza, which we did not have exact visibility of at that time. Apart from our making a new workshop at Yogeshwari, we believe that it would be maybe another 30 crores or so as of now as we believe.

Vijay Pandey, Analyst — Access Capital Limited

Thank you. Okay, sir. I'll phone you on mute.

Operator

Thank you. The next question is from the line of Simran Thakkar from BS Capital. Please go ahead.

Simran Thakkar, Analyst — BS Capital

Thank you for taking that question. What do you think of revenue shares, place at the OLX, and what model will this follow? And also, what do you mean by the vipers acquired and sold, which is mentioned on the presentation? Also, if you could, my second question, I'll take it up first.

R. Aryaman Thakkar, Other

Simran, sorry, I would repeat the question as it was not very clear to understand.

Operator

I would request you to kindly use your handset, please.

R. Aryaman Thakkar, Other

Yes.

Operator

There is a disturbance when you use your headphones. Yeah. Sure.

Simran Thakkar, Analyst — BS Capital

Am I audible now?

Operator

Yes. Much better.

Simran Thakkar, Analyst — BS Capital

Okay. Our sister wanted to understand, on the revenue share split with the OLXB, and what model is this model, will that be on the gross sales booking basis, or will it be on the commercial basis, like we have in take-up marketing agency model, and also in the presentation, where we have mentioned, vehicles acquired and sold. So, what does that mean? Like, will the inventory be on our balance sheet till the time it is being sold? So, that's my first question.

R. Aryaman Thakkar, Other

Yes, so I'll take that question. So what it is, and this is, as we said, it's an industry-first sort of partnership. It's a business agreement between two parties. What we are doing is that to create this digital model and merging two leaders in their respective industry, the point is that the vehicles will be jointly acquired. And co-funded, yes, it will be lying in the balance sheet of landmark cars. So the cars will be jointly acquired, refurbished where needed, and then put up back for sale. And the margins which are kind of accrued will then, after costs, be shared between both the entities.

Simran Thakkar, Analyst — BS Capital

I understand. Also, taking this question ahead, in the U.S., usually we see these used cars, the revenue share is around 30 to 40% for the U.S. dealers. So, what share of revenue and EBITDA does the landmark management expect out of these used cars, and what are the rotis that we are expecting out of it?

R. Aryaman Thakkar, Other

So, yes, you are right. I think in the U.S., it is a much more mature used car market, and the new car retailers have a very healthy contribution of used car turnover as well as profits in their books. As you rightly said, around 30%. In India, that penetration is significantly low. The new car retailers approximately only account for 3 to 4% of their revenue compatibility. It's in the single digits. What we said, I think the idea is that we will be rolling this out in phases. In the first phase, we will be going live with a certain number of cities and brands. The idea is to get the process. The exact business model right, because we are looking at it in a long-term way, and we want to build a profitable and a scalable model, which has so far not been successfully done in the country. So we will kind of build it over time, and we've just gone live. Having done our first few transactions in the post-Diwali period, and post this, we will be going, post this phase, we will kind of expand in our cities and our brands. So, difficult to give you an exact number right now, but I think once we have the processes and we are confident that... That can be replicated, then we will press the accelerator and see much more transactions happening here.

Simran Thakkar, Analyst — BS Capital

So, my fourth question is on the inventory and the OCA toning negative for this quarter at 16.9 crores, and also we see the gross borings which rose to 144.5 crores. So, again, if we speak on quarter 4 and quarter 1, FI 27 phone call, wherein we mentioned that the debt would be reduced. So, if we could just let us know, like, what would be the inventory and debt expected by FI 2027 and how the trajectory will look like, please?

Sanjay Thakkar, Chairman

Yeah, so as I said, the inventory levels will come down. We need to put an exact number to it, but this is something we never thought that the demand would be so strong. And the prices, as was discussed earlier, sometimes it makes sense to buy the inventory because the prices are going up. So, it's a very dynamic kind of a situation. There has also been some talks of supply chain disruption because of the war and all that. So, whenever the inventory comes, we sometimes take a business decision to procure it. There are certain items, certain vehicles which are imported, and the ships and the kits kind of reach at a particular time. So it's at a certain time zone. We are, as of now, comfortable with what we are holding and not really that concerned. We believe that over a period of time, this will come down. We are at around 35 days of new car inventory, which I think most people in the industry believe that anything under 30 is good. So keeping that in mind, I won't be too worried on this matter right now.

Simran Thakkar, Analyst — BS Capital

I understand, sir. That's helpful. Just one last thing to confirm. So, the Wuhan data is showing some lower growth. So, should we read it in terms of mass market growth or the luxury cars as well? Your opinion would be really helpful.

Sanjay Thakkar, Chairman

Please repeat the question. I did not get it.

Simran Thakkar, Analyst — BS Capital

Yeah, I'll see. So, Vahan data, the new data which is out. So, there it mentions that there is some global growth which is being seen in the market. So, should we interpret it in terms of market demand or should we also see something that you are facing in terms of luxury market as well?

Sanjay Thakkar, Chairman

So, I think what you are referring to is the numbers, the Vahan numbers for the month of October, 25 versus 26. Is that, Simran, what your question is? Because you are right, the October of 25 was a very unusual month, where the GST cut happened, the festival was all there, and it got all bunched up. There was a two-month pent-up demand last year, same time. So, it is no surprise, clearly the growth percentage that we have seen in the first Half of the year will not continue in the second half as a percentage. But I personally believe that the growth will happen in the next six months also. This is also the view of Siam, which believes that we will have a decent growth even in the months to come.

Simran Thakkar, Analyst — BS Capital

I understand. Great. Thank you so much for taking my question.

Operator

Thank you. The next question is from the line of Raunak Mehta from ICICI Securities. Please go ahead.

Raunak Mehta, Analyst — ICICI Securities

Thank you for the opportunity. Sir, I have two questions. One is, with respect to your partnership with OLX, would you be tracking any internal metrics to see how efficient this partnership turns out to be or to keep evaluating whether this is actually beneficial for you? Because, uh, And there could also be a risk where some of the customers that come via OLX would have anyways come to you. And just because they have come via OLX, you will have to share some revenue or margin. So, profitability on those revenue could be lower, which would otherwise not be the case. So, is there any metric that you will keep on track, that you will track, such as the number of people sold per employee, is it improving, or something of that sort? That would be my first question.

R. Aryaman Thakkar, Other

So, yes, the idea is that, of course, we have internal metrics and APIs that we will be using to track it. However, what we are also looking at is that OLX right now represents upwards of 60%, I think car trade OLX, upwards of 60% of used car listings in India are happening on one of their platforms. For us, I think the idea also is that we get expanded reach. While procuring used cars is there, we need to make sure that we are also able to liquidate them at a quicker rate, because that to make a profitable and a scalable model. So that is where we believe that their expertise will also help us, will be in the listings and the reach. And because these vehicles will also be branded jointly by both the parties, that will give a sort of expanded reach and we can get the transactions done quicker. What we also expect will be a secondary benefit to this is that while customers come to sell their cars, it may also act as a funnel for new car inquiries that we will generate at our existing locations. So that is another added benefit that we believe will come out of this partnership.

Sanjay Thakkar, Chairman

Ronak, if I were to add, Aryaman answered this question. Let us look at the bigger picture. The point is that so far nobody has been able to crack the pre-owned car space in India profitably. And there have been a lot of money which has been burnt. So the two organizations have kind of shaken hands with the idea that we will not burn money, we will be capital efficient. And is there a way that this whole business of pre-owned cars, can it be done profitably? Nobody has been able to do it. So we are making an effort of an online leader with an on-ground present leader. Now, this is something which is an emerging kind of a business model. And we are internally pretty excited with the prospect of it. The softwares are getting built. The teams are getting built. And as time goes by, we will share more details with you on this.

Raunak Mehta, Analyst — ICICI Securities

Perfect, sir. Okay. My second question is on if you could help us refresh your positioning across different brands. For instance, Mercedes and Honda, you are the largest partner for them in India. But for some of the newer brands like, say, JSW, basis your current engagement with the group, do you envisage a scenario where your positioning could be similarly strong in JSW? And how do you see that panning out for some of the other viewer brands?

Sanjay Thakkar, Chairman

In the newer brands, we are the largest partners for BYD. We are the third largest partner for JSW, MG Motors. So we have kind of, if you count four new brands, in the two of them, we already have a sizable kind of presence. And the thing is that we are continuously evaluating. The global scenario is so dynamic and things keep on changing. Who would have thought that companies like a Volkswagen, seven years back, if you were asked this question as to what is going on through a Renault or a Volkswagen or a Honda, you would not have been able to answer or I would not have been able to answer. So this is an ever-changing thing. So, the good part about our organization is that we have made a lot of our... Infrastructure is fungible. Our people, we are able to kind of put them in different roles. So wherever the business demands investments, we kind of put our capital and efforts behind it. But to answer your question, the point is that wherever we... Go, we generally, and if the business is profitable, we become a meaningful partner for those brands. So it is not only two, it's four, five brands where we are in their top one, two.

Raunak Mehta, Analyst — ICICI Securities

All right, sir. Thank you.

Operator

Thank you. We'll take the next question from the line of Lokesh Manik from Wellam Capital Advisors. Please go ahead.

Lokesh Manik, Analyst — Wellam Capital Advisors

Yes. Hi. Good morning, Sanjay sir and team. Am I on the bill?

Sanjay Thakkar, Chairman

You are, Lokesh. Please go ahead.

Lokesh Manik, Analyst — Wellam Capital Advisors

Great, great, sir. So, just wondered your views on the recent IRG announcement on the motor insurance. If you've had a chance to speak to your OEM partners, how are they looking at this? How are you looking at this internally? And what could be the impact broadly if these guidelines are to come as they are proposed on our profitability as well? So, if you can share your thoughts, it would be really great. We'll have some clarity on that.

Sanjay Thakkar, Chairman

Thanks, Lokesh. Now, this IRDA matter, you may know that the first phase was the consultation paper, which will be followed by draft regulations, and then the third stage is the actual regulations. So, the regulator asked for comments and suggestions, and our association, FADA, has made a very strong representation on what needs to change in those draft regulations. So, I have been a part of that kind of submission, so I am aware of it. So, let us wait and see. The indications are that the consultation paper will be modified. That's the view we are getting. It's a little early. So, we have had no conversation with the OEs on this matter because we do not know what is really going to happen. Also, just so that you know that the deals that happen at our end when you sell a car. And it's like an on-road price, which includes the RTO, the insurance, sometimes the accessories and all that. So it's a package deal sometimes that happens. So we will have to kind of wait and watch how industry evolves over here. Very difficult to put a thing right now.

Lokesh Manik, Analyst — Wellam Capital Advisors

Okay. That's it from my side, sir. Thank you so much.

Operator

Thank you. We'll take the next question from the line of Akhil Parikh from 361 Capital. Please go ahead.

Akhil Parikh, Analyst — 361 Capital

Yeah, thanks for the opportunity, and congratulations on a strong set of numbers. Sir, my first question is, I think in previous call, you had broadly mentioned that first half and second half split between the profitability is usually 40-60 or 45-55%. So, does that hold true even for this year, if you can give some broader direction on that one? That's my first question.

Sanjay Thakkar, Chairman

That's what my 27 years has basically shown me. So I hope that trend continues. I mean, there's no reason to feel otherwise. Generally, there are strong months, which is the Diwali month, October. There is a strong December in the industry. I'm talking about the industry. Then there is a March. So there are very big months which generally happen in our industry, and we are hopeful as we speak.

Akhil Parikh, Analyst — 361 Capital

Sure. Sure. So, broadly, I'm saying 60% of profit should, kind of 50% or 60% should come in.

Sanjay Thakkar, Chairman

I'm saying that that's what has been the historic trend.

Akhil Parikh, Analyst — 361 Capital

Great. That's very good to hear. So, second on the operating cash flow, right, you did mention that inventory has increased mainly because of shift in testing this year. Last year, we did a ballpark 270-odd crore of operating cash flow and 200 crore of free cash flow, implying 100% of EBITDA to OCF conversion, basically, by mid-stakes. Would it be fair to assume that we would do similar kind of EBITDA to OCF conversion broadly or in F.27 as well, so that's the second question. How should OCF entry cash flow look like?

Sanjay Thakkar, Chairman

We will have maybe Surendra, let's hear his voice also. He hasn't participated today. Let's have him hear it.

Surendra Agarwal, CFO

As we told that this is the seasonal impact on the September cash flow, what we have published, we are expecting this little lower than the last year one, because last year it's 0.95 was the ratio of the operating cash flow versus EBITDA, but not much difference, little lower than the last year.

Akhil Parikh, Analyst — 361 Capital

So, that implies we will have a substantial free cash flow this year, and you mentioned that KPEX is not major in FI 27. So, anything you would like to highlight, what we will be doing?

Sanjay Thakkar, Chairman

So, we will be repaying our debt with the free cash flow. And so, maybe let's wait for a quarter more, Akhil. Let's see what is in store.

Akhil Parikh, Analyst — 361 Capital

Sure, sure. And so third and last question before I get back into you, and the cost initiatives I think have done quite well, and I think a year and a half back, you had to provide us that employee expenses and other expenses will go, I think, below 4.5%, 4% of former revenue, and we have kind of overachieved on that. Those line items where employee expenses are now 3.9%. And other expenses are 3.4% of our revenue. While there is a line in the PPTIG, we have mentioned that there is a further profitability we can improve from the cost initiatives. We can throw more light on there is a scope of further improvement on those two line items and any new guidance on employee expenses and other expenses we will like to do.

Sanjay Thakkar, Chairman

This is an ongoing exercise at our end. We want to be a frugal organization, where we wake up and we believe that there is some improvement to be done. So this is something that we will continue to do. We still believe that there is juice in it. It's difficult for me to put a number because... That becomes sometimes then a discussion point for a very long time. But the effort is a continuous process. We have targets internally for everybody to reduce costs. There are committees, there are process owners for one or the other small items, and we continue to kind of push it down, and I am hoping that it could further reduce. I don't want to put a number right now.

Akhil Parikh, Analyst — 361 Capital

Thank you.

Operator

Thank you. We'll take the next question from the line of Proline B. Nandu from Edelweiss Public Ordinators. Please go ahead.

Proline B. Nandu, Analyst — Edelweiss Public Ordinators

Oh, hi, Sanjay Bhai. A couple of questions from my end. Just wanted to understand, I'm on slide 8, right, where you have mentioned that, you know, there hasn't been a significant difference in service revenue from an ICE and EV angle. So, I just want to understand why would that be the case? Why would the frequency of visit be higher for an EV on a per-year basis versus an ICE? Also, even though preventive maintenance is, let's say, 12% and 35% lower, but in brand one, why would, you know, an EV car still require this high repair and maintenance? And at the same time, is it that, I mean, what is it on the accident side, which is the biggest delta, right? What is it that is? It's costing a lot for an accident repair, right? So this slide is slightly, you know, counterintuitive. First point where And some, you know, nuts and bolts on why is that the case on each of these points.

Sanjay Thakkar, Chairman

Yeah, thanks, Nandu. So, this is something that we were all so accustomed to believing that the repair cost for EVs will be significantly lower. That was the starting point in everybody's mind and WhatsApp and all that. Then we deep dived into the data and we waited and we waited and we wanted some decent sample size to then come up with the answer. What is happening in brand one and two both, as you will see, that because the running cost of EVs is much lower than that of the ICE car, which we all understand, that the fuel cost is not there. So EVs generally cost significantly lower to run. So people use it more. Now, this is the first thing that we found, that people, if it is an EV, people use it much more. Now, what happens consequently is that because the car is on the road for more kilometers, more time, the propensity to meet with an accident is higher. It's a clear match. There is no science in it. Apart from the things that the EVs accelerate faster and all that, that is a smaller issue. I think the bigger issue is that because they are on the road for a longer period of time, then they are likely to beat with an accident more. And the second thing is that because the kilometers are higher, the service interval gets kind of compressed. Assume, I'm just giving an example that every, say, 7,500 kilometers there is a service, then that 7,500 kilometers becomes, comes faster. If it is, say, six months for the ICE car, for this, it may be four and a half months. So that's why the number of visits to the workshop is higher. Also, the local garages are completely clueless about EV repair. So, most of the cars or all the cars will... Come back to the authorized workshop for repair. So that's one part of it. And this is something which was in USA Penske. And we saw their commentary a couple of years back, and they had come to a similar conclusion that the EVs were... Actually generating higher service revenue than lower, as what people believed. And yes, it was a surprise to us also, and we continue to watch this space. Another data point for you, in America and some other Western countries, the insurance premium for EVs is going much higher than ICE cars, because the cost is higher.

Proline B. Nandu, Analyst — Edelweiss Public Ordinators

Oh, that's very clear, right? The second question would be on your brand, Mercedes-Benz, right, which you have as one of your brands that you distribute, right? So, how is the typical mindset of the customer when he walks in, right? And I'm talking more in terms of his inclination towards buying a Mercedes ED versus a Mercedes ICE, right? What is it that, you know, is it that conversion happens at our end or has it pre-decided? And then, you know, just a question related to that. Do you think that the share of or the overall numbers? Let's say, I will keep on coming down for a luxury brand like Mercedes in your repertoire, right, based on whatever experience that you have while talking to some of your sales managers, right? So for a luxury brand like Mercedes, what do you think will happen in terms of the mix between ICE and EV?

Sanjay Thakkar, Chairman

So, since you asked specifically about Mercedes-Benz, the availability was the biggest challenge this year as far as the EV portfolio is concerned. So this year, the EV penetration for Mercedes would be just under 10% or so. But this will go up as the availability increases. Aryaman mentioned in his talk that the GLC EV, which has got launched, is kind of sold out for the next four months. We have the CLA, which is a sold out situation. So, the movement, it is a supply issue more than the demand issue. As the industry evolves, more and more EVs will sell.

Proline B. Nandu, Analyst — Edelweiss Public Ordinators

Right. So then typically, so what you're saying is that for that kind of a customer also, the preference is more towards EV, right? Or it's an increasing preference that you see versus an ICE, right? So what might happen is that even the total volumes on ICE might see a decline for a brand like Mercedes, right? And EV will see a huge growth, right? Because availability is improving. That's a fair conclusion to make or how should one...

Sanjay Thakkar, Chairman

It's a very dynamic thing, Dandu. It's difficult to say how the customer preferences change overnight. It will depend on a lot of stuff, but from where EVs are, the numbers will clearly increase. Now, where it will go and stop or whether it will just continue, our belief is that all powertrains and then you will have a plug-in hybrid and some new technologies will also kind of come in. So, if it's something that is happening globally, we will find a kind of a balance in the next two, three years.

Proline B. Nandu, Analyst — Edelweiss Public Ordinators

Thank you, Sanjeeva, and all the very best.

Sanjay Thakkar, Chairman

Thanks.

Operator

Thank you. The next question is from the line of Harsh Shah from Helios Mutual Fund. Please go ahead.

Harsh Shah, Analyst — Helios Mutual Fund

Yeah, hello. Good morning, Sanjay Bhai. Congratulations on a good start of numbers. My first question was with respect to the OLX partnership. Can you allude like how much capital we are going to commit initially till you get the model right, business model right?

Sanjay Thakkar, Chairman

It is going to be a very small kind of a capital over here. And till we get the model right, there is no meaningful capital that will happen. And as I think we have said, it will be the capital allocation will be shared between the two organizations.

Harsh Shah, Analyst — Helios Mutual Fund

Anything less than Python cross?

R. Aryaman Thakkar, Other

Yes, in that range to start with.

Harsh Shah, Analyst — Helios Mutual Fund

Okay, got it. And secondly, sir, with respect to the Capex, we had guided for 50, we have done 15 in H1, and there is still five more branches, five more dealerships we are planning to open for JSW, and also we have invested around 50 crores in the subsidiaries. So, is there an upside risk to the 30 crore number as well for H2?

Sanjay Thakkar, Chairman

So, when I say 30, we have taken the JFW in mind. Our DENSA is coming at kind of the same locations as where BYD is. We are keeping a hawk eye on the thing. The JFW is where our subsidiary investment is going. So, it's the same thing that you are talking about.

Harsh Shah, Analyst — Helios Mutual Fund

Okay. Okay. Got it. Okay. And so the last time we had a very high capex, there was an impact on margins because the cost can typically get affronted. So because of this higher capex, do you think that the margin recovery that we have seen over the last few quarters, that may see moderation and going forward, we may see some decline in margins, EBITDA margins.

Sanjay Thakkar, Chairman

See, what you need to keep in mind is that the capex that we are talking about, or the 50 crores, also includes some vehicles. Now, this is maybe not coming out over here. There are some Mercedes-Benz vehicles which are used in the workshop, which has been classified. So, it is not a pure, pure capex which has happened. That's the first point. The second thing is that the money that has gone in is to kind of relocate the existing workshops. I spoke about three workshops becoming one in Mumbai, where I'm sure we will call you all in the next two months. So, it is nothing that requires any gestation period. It is just a seamless kind of a transition. So, there is really nothing from this CAPEX which tells us that there is any gestation period anywhere.

Harsh Shah, Analyst — Helios Mutual Fund

Okay. You got it. All right, sir. This was very helpful. Thank you.

Operator

Thank you. A request to all the participants to kindly limit their questions to only two per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Hittendra Pradhan from Maximal Capital. Please go ahead.

Hitendra Pradhan, Analyst — Maximal Capital

Yeah, hi, fellas. I hope I'm audible. Yes, it is. So, on the after this volume, correct one. So, it was sort of flat year-to-year. So, just wanted to, you know, understand what contributed to this sort of, you know, volume, you know, growth. And given, you know, the workshops that were added and the volumes of cash sold in the last few quarters, could we see marginal uptake in this obvious volume going forward?

Sanjay Thakkar, Chairman

So, we have in our presentation also said that nearly four of our workshops were impacted because of rains and they were not operating for maybe some workshops for over a month. So, the service volume was impacted because of the rains in Gujarat, South Gujarat and Ahmedabad mainly. So, this is something which is there, but you will see that the revenue growth is nearly 11 percent, which is a good growth in my mind. You will also see that the per... Service revenue has again gone up to an all-time high of nearly 30,300 rupees. Now, we are making up for the lesser volume with higher revenue, and sometimes it is a deliberate thing. The infrastructure is an expensive proposition, so we don't want to kind of utilize it for low-paying jobs, just to increase the volume for the sake of it.

Hitendra Pradhan, Analyst — Maximal Capital

So, my second question is on the, you have commented on this, on the insurance commission revenue. I understand that, you know, it is still like, you know, draft and, you know, the discussions are going on. But, sir, how do you see it evolve? Like, you know, do you think will be provided a glide path or the CAFs, you know, itself would be reset? I mean, any view or any comment on that?

Sanjay Thakkar, Chairman

That is the hope of a lot of people in the industry, not only auto dealers, but also insurance brokers and agents and all that, because there has been a glide path given to the insurance companies to meet the expense of management. So why should there be no glide path for the other matters? So this is something we will clearly, anything else that I say is going to be pure speculation. So, let's wait and watch.

Hitendra Pradhan, Analyst — Maximal Capital

Okay. Thank you, sir, and all the rest.

Operator

Thank you. The next question is from the line of Shashank. Shashank Kanotia from ICICI Security. Please go ahead.

Shashank Kanotia, Analyst — ICICI Securities

Yeah. Good morning, sir. This is a good operational performance. I also appreciate the first way to take to explain the character of the presentation. Sir, my first question is one of margin front rides. On the new car sales, we have clocked 2% margin for quite some time. So, what will be your sustainable outlook there, and are there any levers for the rapid going forward?

Sanjay Thakkar, Chairman

So, Shashank, we have had this discussion, and at Landmark, we held on to the belief and the understanding that the business of sales as well as service, both are profitable, and we have in the past kind of done this consistently. The reason why the sales margins had gone down in the last maybe two years or so was for the reason that we had started new brands and we were in a kind of a, there was front loading of expenses mainly, which was playing out. So we are getting back to our normal kind of a self and as of now there is no reason to believe that it will be anything different.

Shashank Kanotia, Analyst — ICICI Securities

So, sir, should we expect a further update?

Sanjay Thakkar, Chairman

I won't, Shashank, it also depends on a lot on the new car sales, depends on the discounts level, if at all, the demand economy. We are wedded to the state of the economy, as you know. Things are looking good as of now. But, I mean, going ahead one year out, two years out, difficult to kind of say. But as of now, we are confident of what is happening. I think we'll reiterate what I just said. We have done it in the past. We are confident of what is happening. Things are looking quite fine right now.

Shashank Kanotia, Analyst — ICICI Securities

So, after-sales surveys, you always have a tendency of talking double-digit volume growth on after-sales sites. So, last two quarters have been kind of muted. Obviously, this quarter you mentioned that there has been an impact on that third. But, effectively, should we be resuming this double-digit sales volume growth there?

Sanjay Thakkar, Chairman

It has been a double-digit growth even in this quarter, Shasham. We have an 11% growth in after-sales right now. No, we never kind of give guidance on the volume. We are always on the value. So if you look at our presentation also, it talks about the value, which we are never kind of focused on the volume. Same as for new cars. We don't disclose the number of cars sold and all that.

Shashank Kanotia, Analyst — ICICI Securities

Right. And sir, last time you clocked 30,000 rupees at AHP, you had 20% margin profile. This time it's 17.6. So do we expect a better margin in this division going forward?

Sanjay Thakkar, Chairman

Again, this I have kind of explained, we have said that the business is approximately 18% margin business, 40% gross, 18% EBITDA. This is what we in our business kind of talk about. Now, last quarter, and again, that I said that there was a transition period where we had to kind of pay expenses for four workshops when they were transiting. Now, that is normalized, but this half a percent or a quarter percent here there is based on seasonalities. It also depends on some annual bonuses that we get at the end of, say, December or March. So, it will all even out over a period of time.

Shashank Kanotia, Analyst — ICICI Securities

Yes, sir. And, sir, are we adding any other luxury brand in our portfolio, given the other, you know, global union is talking big about India, let's say something like JLR or something?

Sanjay Thakkar, Chairman

No, there is nothing that I can talk to. On this call, there is nothing I can say. We have got Denza, and that has received a great response. We launch it at 12 o'clock today.

Shashank Kanotia, Analyst — ICICI Securities

Sure, sir. Wish you all the best, sir. Thank you so much.

Operator

Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.

Sanjay Thakkar, Chairman

Thank you, everybody. I think the hard work of our team has paid off, and it will continue to deliver. Thank you for having faith in us, and thank you, and happy Diwali.

Operator

Thank you, members of the management. On behalf of 361 Capital, that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.