CarTrade Tech shares made a weak start in the stock market on Friday. listed on scrip ₹1,579 on the BSE, 2 per cent lower than its issue price of 1,618. CarTrade Tech shares open Rs. ₹1,599.8 a piece. At 1100 hours IST, CarTrade’s stock was trading 3.13 per cent lower at Rs 1,550 on BSE. The stock was trading at 1,564.00, down 2.24 per cent on the NSE.
“Cartrade IPO was listed today at around ₹1,600, which is 1.2 percent lower than the IPO price and is now trading at ₹1503, which is 7.1 percent lower than the IPO price. We suggest investors who received the allotment So, they should hold the shares for a short period of time as we expect some correction in the stock in the near future. We are not advising investors to make fresh purchases in the stock. Presently, the company is trading at 68 times earnings. The company has reported an improvement in financial performance in the last three years. The net profit of the company has increased from Rs 31 crore in FY 2020 to Rs 101 crore in FY 2021 in the time of COVID pandemic,” Yash Gupta Equity Research Associate, Angel Broking Limited said.
Established in 2000, CarTrade Tech Limited is a multi-channel auto platform. They provide a variety of solutions across the automotive transaction value chain for marketing, buying, selling and financing new and pre-owned cars, two wheelers as well as pre-owned commercial vehicles and agricultural 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 raised Rs 2,998.51 crore through its IPO. It was an outright offer for sale by selling to shareholders.
The initial public offering (IPO) of CarTrade Tech was subscribed 20.29 times. Data available with the National Stock Exchange (NSE) shows that it received bids for over 26.31 crore shares against a total issue size of over 1.29 crore shares. The share allocated to Qualified Institutional Buyers (QIBs) was subscribed 35.45 times, while the share of non-institutional investors was subscribed 41.00 times. The data showed that the Retail Individual Investors (RII) quota was oversubscribed 2.75 times.
“Cartrade operates on an asset-light business model and is well established 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 among customers and stakeholders. Furthermore, their investments in technology have made their platforms scalable in a highly capital-efficient manner. Going forward, the company plans to grow the business by investing in technology, increasing its online-offline presence and adopting a vehicle-agnostic approach. On the financial front, the company’s revenue in FY21 has seen a decline due to the Covid-19 impact, but is expected to stabilize in the medium term. Among the industry players, CarTrade is the only profitable company which is a positive sign,” Religare Broking said.
“According to Frost & Sullivan, the used car market in India was 3.8-4.0 million units annually, making it 1.5X larger than the new car market’s 2.6-3.0 million units, compared with 2.8X in the USA and 4.1X in Compared to Europe. Volumes in both segments, used and new cars, are set to grow at a CAGR of over 10 per cent in India over the next 5 years. Worldwide shortage of chips and semiconductors has not only affected the production schedule of new vehicles This has resulted in sharp price hike. With this situation unlikely to improve for the next one year, the used car market is expected to remain bullish,” Ventura Securities Ltd. said.
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