Cartrade Tech Limited incorporated on April 28, 2000, is a multi-channel auto platform with coverage and presence across vehicle types and value-added services. The company operates various brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz and through these platforms, it enables new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell their vehicles in a simple and efficient manner.
They are the only profitable digital auto platform among the key competitors for FY 2020 and CarWale and BikeWale are ranked number one on relative online search popularity when compared to their key competitors, while Shriram Automall is one of the leading used vehicle auction platforms based on number of vehicles listed for auction for the FY 2020.
Promoters & Shareholding:
CarTrade Tech is a professionally managed company with no identifiable promoters.
Public Issue Details:
Offer for sale: OFS of approx. 18,532,216 equity shares of Rs. 10 aggregating up to Rs. 2,998.51 Cr.
Total IPO Size: Rs. 2,998.51 Cr.
Price band: Rs. 1585 – Rs. 1618.
Objective: To carry out an offer for sale and achieve the benefits of listing the Equity Shares on the stock exchanges.
Bid qty: minimum of 9 shares (1 lot) for Rs. 14,562 and maximum of 13 lots.
Offer period: 9th Aug 2021 – 11th Aug 2021.
Date of listing: 23rd Aug 2021.
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Pros:
- Leading Marketplace for Automotive Sales with a Synergistic Ecosystem.
- Brands and Customer Experience Driving Powerful Network Effect.
- Professional and experienced management team.
- Proprietary End-to-End Technology Platforms.
- Founder-led Management Team.
Cons:
- The company has had negative cash flows in the past and may continue to have negative cash flows in the future.
- Company revenues are fluctuating.
- Covid-19 pandemic has affected the business and it may continue to affect in future pandemics too.
- They may experience disruptions, failures, or breaches of its technology platforms.
Subscribe or avoid?
The entire automotive ecosystem is highly fragmented, complex and riddled with challenges. India is expected to become the world’s third largest automotive market by 2025 in terms of volume, driven by key factors such as digitization, changing consumer behaviour and innovative services. Indian car market was one of the fastest-growing markets in the world, growing at a CAGR of 7%. As the smartphone and internet penetration increases in India along with new and used automotive sector, it is expected have positive impact on the company and its business.
On the financial side, the company has had strong financial performance for the past 3 year; they have reported revenue of Rs. 430.69 Cr, Rs. 331.34 Cr and Rs. 311.52 Cr in the FY21, FY20 and FY19 respectively and net profit of Rs. 15.57 Cr, Rs. 16.21 Cr and Rs. 63.82 Cr in the FY21, FY20 and FY19 respectively. Looking from valuation stand-point, for the last 3 years average EPS of Rs 11.93, P/E ratio is around 135x. On the upper price band of Rs 1,585 and EPS of Rs 19.19 for FY21, the P/E ratio works out to be 84x. Hence, the P/E range works out from 41.6x to 51.6x. The issue appears over-priced. However, there are no listed peers for this company. Due to current Bull Run and Investors frenzy aptitude, this IPO may provide some gains on listing day and in short term. Considering all the above factors, we recommend only high risk Investors to “SUBSCRIBE” to this IPO. The conservative & moderate risk Investors may give it a miss and wait for better options as many IPOs are lined up this year.
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