CarTrade IPO Analysis, Details and Review

CarTrade IPO Review

It’s not surprising that a lot of internet companies are opening their doors to the public. The event is very much the same as a number of NBFCs filing for IPOs after the 2008 financial crisis.  However, now is the time for Internet startups to publicize. Let’s look at the next generation  company ready for its initial public offering – CarTrade Tech Ltd.  

What Does CarTrade Tech Do?
CarTrade Tech Ltd. is an internet company which is a brainchild of Vinay Vijay Sanghi. CarTrade  Tech Ltd. is a multi-channel auto platform provider company which was incorporated in 2000.  The company carries its businesses through a complete host of platforms of CarWale,  CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto, and AutoBiz.

This set of platforms bridges new and used automobile customers, dealers, manufacturers,  and other businesses to buy and sell automobiles. CarTrade.com is a hybrid platform of Olx.com  and Amazon.in as in case you are a buyer looking for a car you get to view new cars by all listed  manufacturers, second-hand (used) cars by all listed sellers and if you are a seller selling a car  or manufacturer who wants to showcase a car, CarTrade.com allows you to do it all.

IPO Timeline 

Open date 9-Aug-21 Closing date 11-Aug-21 Allotment date 17-Aug-21 Initiation of Refund 18-Aug-21 

Credit of shares to Demat account 20-Aug-21 Listing Date 23-Aug-21 

IPO Details 

Face Value Rs. 10 per Equity Share 

Issue Price Rs. 1585 – 1618 per Equity share Market Lot 9 Shares 

Issue Size Rs.~2999cr (18,532,216 Eq. shares) Fresh Issue Nil 

Offer for Sale Rs.~2999cr (18,532,216 Eq. shares) Source: Company Red Herring Prospectus 

Who’s selling?
CarTrade Tech Ltd., is not issuing any new shares, its existing investors are selling 18,532,216  shares in the IPO. Total 9 existing shareholders have agreed to offload their equity shares in  the IPO. The company’s largest marquee shareholder Highdell will sell 8,409,364 equity  shares, followed by MacRitchie, CMDB and Springfield will sell 5,076,761, 2,264,334 and  1,765,309 shares respectively. The remaining selling shareholders include Bina Sanghi  (183,333) Vinay Sanghi (450,050), Daniel Neary (70,000), Shree Krishna Trust (292,516) and  Victor Perry (50,546).

Objective of the Issue 
CarTrade Tech Ltd. will not receive any proceeds from the offer and all the offer proceeds  will be received by the existing major shareholders. The company intends to use the proceeds  to carry out the Offer for Sale; and achieve the benefits of listing the shares on the markets.  Listing of the Equity Shares is done to ensure and enhance the visibility and image of the brand.  Most importantly, listing on the stock markets will allow you to be part of the growth story of  the brand.

Understand the Business
CarTrade generates revenue from several streams such as commission and fees from auction  and remarketing, online advertising solutions, lead generation for manufacturers and sellers,  technology based services for OEMs, banks, insurance companies etc.; and inspection and  valuation services for banks and other financial institutions, insurance companies and OEMs.

• As we mentioned earlier CarTrade Tech Ltd. has a whole host of online platforms through  which it carries out its businesses. 

• Of the platforms, CarWale and BikeWale were the #1 platforms on relative online  search popularity when compared to their key competitors over the period from April  2020 to March 2021. 

• While CarWale and CarTrade are designated platforms for four-wheelers, BikeWale is a  distinct online platform for users looking to find new/used bikes on the internet. • CarWale and CarTrade also engage in financing and automotive ancillary companies to offer  their products and services on the platforms. 

• Shriram Automall is a vehicle auction platform for used cars. According to Red Seer it was one of the leading used vehicle auction platforms based on number of vehicles listed  for auction for the FY20. 

• Shriram Automall not only lists vehicles for auctions but also facilitates sells of commercial  vehicles, three wheelers and farm and construction equipment. 

• CarTrade Tech Ltd. was also the only profitable automotive digital platform for FY20  among its key competitors. 

• Adroit Auto offers vehicle inspection and valuation services used by insurance companies,  banks and other financial institutions. 

• AutoBiz provides new car dealers a CRM solution to manage their customers in an efficient  manner. 

Story through charts

Source: CarTrade Tech Ltd. RHP

Multichannel Auto platform, CarTrade, is one among few internet companies that have turned  profitable early and added value to its shareholders. 

A multichannel For the financial years 2021, 2020 and 2019, our total income was Rs. 2,815.23  million, Rs. 3,184.45 million and Rs. 2,668.05 million, respectively, and our restated profit for  the year was Rs. 1,010.74 million, Rs. 312.94 million and Rs. 259.17 million, respectively. 

Company’s adjusted EBITDA margin was 27.62%, 22.71% and 24.42% for the financial years  2021, 2020 and 2019, respectively. 

MyFinopedia’s Expert Views:
Interestingly, growth of CarTrade Tech Ltd, will be driven by several sectors such as  Automobile, automotive ancillaries, digitalization, etc. 

The automobile market in India is the fifth largest car market in the world in CY2020 and is expected to grow at a CAGR of >=10% from FY21 to FY26. The COVID-19 pandemic has affected the passenger vehicle industry, but has also fueled the ‘Go-digital’ movement across  the industry. The entire vehicle buying journey is undergoing digital transformation from pre purchase browsing to pricing comparison, dealer discovery, financing options etc. 

Dealers have also understood the value of online platforms and have started using them for  services such as listing, sourcing vehicles, lead generation etc. Used cars market is  comparatively very small compared to those of developed countries. But the plus point is, there is  significant headroom for the used cars market. 

With more and more companies choosing to come on the internet to do their business and more  and more people flocking the internet to browse, compare prices, read reviews and purchase  products or services, internet-based companies are bound to help from this wave. 

With this, we conclude our IPO review of CarTrade Tech Ltd. We trust we have optimum  information about the company, headwinds and tailwinds and industry analysis to help you make  your decision about whether you should subscribe or not! 

Disclaimer: Information shared in this blog is only for informational purposes. One should not  consider it as a buy/sell/hold recommendation by MyFinopedia. Giving free recommendations without  assessing an investor’s risk is prohibited by SEBI. 

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