On August 9, CarTrade Tech, a multi-channel car platform with a presence across a wide range of vehicle types and value-added services, launched its public subscription offer.
All analysts have given the offer a thumbs up, citing the offer’s first-mover advantage in the segment, No. 1 ranked platforms (Carwale and Bikewale) in their respective categories, profitable and scalable business model, high brand visibility and affinity, and focus on data science to provide superior solutions.
CMDB II, Highdell Investment, Macritchie Investments, Springfield Venture International, Bina Vinod Sanghi (jointly held with Vinay Vinod Sanghi), Daniel Edward Neary, Shree Krishna Trust, Victor Anthony Perry III, and Vinay Vinod Sanghi are all selling 1, 85, 32,216 equity shares in the IPO (jointly held with Seena Vinay Sanghi).
The business expects to raise Rs 2,998.51 crore from the offer, which would be priced at the top of the price band of Rs 1,618 per share. On August 6, a day before the issue’s debut, it had already raised Rs 900 crore from anchor investors. The promotion will end on August 11th. “In the car platform area in India, CarTrade is the only profitable player and one of the few globally. It holds the No. 1 ranked platforms in their respective categories, namely Carwale and Bikewale, which gives Nirmal Bang confidence in the company’s long-term growth, which is fueled by the network effect.
“With a war chest of Rs 668 crore on its balance sheet, CarTrade is well positioned and plans to capture adjacent business opportunities, including as insurance, financing, vehicle servicing, accessories, and refurbishment-cum-sale of cars,” the brokerage added.
The company has a successful and scalable business strategy with a focus on data science to create superior solutions, and is ideally positioned to gain from the rise of the automotive sector and digitalisation, according to Marwadi Financial Services.
CarTrade Tech offers a one-of-a-kind business model that has no competitors in the market. CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto, and AutoBiz are some of the brands it operates. Customers, vehicle dealers, vehicle original equipment manufacturers (OEMs), and other organisations can utilise the platform to buy and sell various sorts of vehicles.
The company provides a variety of solutions for purchasing, selling, marketing, financing, and other vehicle transactions.
The company earns money through a variety of sources, including commissions and fees from used vehicle auctions and remarketing, internet advertising solutions, lead generation, technology-based services, and inspection and valuation services. Anand Rathi believes the issue is offered at 4.4x P/BV, 29.6x EV/sales, and 73.4x P/E at the top end of the price band (Rs 1,618 per share) (price-to-earnings). If we take out the accounting adjustments for deferred tax and allocate it to equity, the asking price is roughly 199.26x FY21 earnings, with a market cap of Rs 7,415.95 crore, indicating that the issue is overpriced.
However, given the business’s future prospects and the fact that it has a first-mover advantage, the brokerage issued a ‘subscribe’ rating, indicating that investors can invest in the company for the medium to long term.
In India, yearly new car sales are predicted to increase from 27 lakhs in fiscal year 2021 to 44 lakhs in fiscal year 2026, while annual used car sales are expected to increase from 44 lakhs in fiscal year 2020 to 83 lakhs in fiscal year 2026. “The Indian automobile sector has a lot of space to expand. CarTrade would undoubtedly gain from this expansion “Asit C Mehta stated.The issue was also given a’subscribe’ grade by Choice Broking.
Highdell Investment (an affiliate of Warburg Pincus LLC), with a 34.44 percent stake; MacRitchie Investments Pte Ltd (an affiliate of Temasek), with a 26.48 percent stake; CMDB II (private equity fund run by JP Morgan), and March Capital (which owns Springfield Venture International and MCP3 SP) are among the company’s institutional investors.