CarTrade Tech shares made a weak debut on the stock market on Friday. The scrip got listed at ₹1,579 on BSE, 2 per cent down from its issue price of 1,618. On NSE, CarTrade Tech share debuted at Rs ₹1,599.8 a piece. At 1100 hours IST, CarTrade share was trading at Rs 1,550 on BSE, 3.13 per cent down. On NSE, the share was trading at 1,564.00, 2.24 per cent down.
“Cartrade IPO got listing today at nealry ₹1,600, which is down by 1.2 per cent from the IPO price and now trading at ₹1503, which is down by 7.1 per cent from the IPO price. We suggest investors who have received the allotment hold the share for a short time as we expect the stock to show some recovery in the near future. We are not recommending investors to do fresh buying in the stock. Currently, the company is trading at price to earnings of 68 times, the company has reported improvement in financial performance in the last three years. In the times of covid pandemic company’s net profit has increased from ₹31 crores in FY2020 to ₹101 crores in FY2021,” said Yash Gupta Equity Research Associate, Angel Broking Ltd.
Established in 2000, CarTrade Tech Limited is a multi-channel auto platform. They offer a variety of solutions across the automotive transaction value chain for marketing, buying, selling and financing of new and pre-owned cars, two-wheelers as well as pre-owned commercial vehicles and farm and construction equipment. Their platforms operate under several brands: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz. Car Trade Tech is backed by marquee investors — Warburg Pincus, Temasek, JP Morgan and March Capital. CarTrade Tech Limited had mopped up Rs 2,998.51 crore through its IPO. It was a complete offer for sale by selling shareholders.
The initial public offering (IPO) of CarTrade Tech was subscribed 20.29 times. It received bids of over 26.31 crore shares against the total issue size of over 1.29 crore shares, data available with the National Stock Exchange (NSE) showed. The portion allocated for the qualified institutional buyers (QIBs) was subscribed 35.45 times, while those of non institutional investors was booked 41.00 times. The retail individual investors (RIIs) quota was subscribed 2.75 times, the data showed.
“CarTrade operates on an asset-light business model and is well placed in the automotive value chain with a combination of online and offline related services. The company has a strong brand recall value and is gaining popularity amongst customers and stakeholders. Further, their investments in technology have made their platforms scalable in a highly capital-efficient manner. Going forward, the company plans to grow business by investing in technology, increasing online-offline presence and adopting a vehicle-agnostic approach. On the financial front, the company’s revenue in FY21 has seen de-growth owing to the Covid-19 impact but is expected to stabilize in the medium term. Amongst the industry players, CarTrade is the only profitable company which is a positive sign,” said Religare Broking.
“According to Frost & Sullivan, the used car market in India stood at 3.8-4.0 mn units annually, making it 1.5X bigger than the 2.6-3.0 mn unit of new car market, compared to 2.8X in the USA and 4.1X in Europe. The volumes in both the segments, used & new cars, are set to rise in India by more than 10 per cent CAGR in the next 5 years. The worldwide shortage of chips and semiconductors has not only delayed production schedules of new vehicles, but also resulted in a sharp price rise. With this situation unlikely to improve for the next one year, the used car market is expected to remain buoyed,” said Ventura Securities Limited.
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