CarTrade Tech makes modest debut on stock markets

Online auto platform CarTrade Tech debuted on stock markets on Friday, closing at Rs 1,500.10 on the Bombay Stock Exchange (BSE), down by 7.29 percent.

CarTrade, a multi-channel auto platform, operates under brands like CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.

It clocked revenue of Rs 281.52 crore in fiscal year (FY) 2021, nearly 19 percent lower than the previous year. However, CarTrade had grown 19 percent to revenue of Rs 318.45 in FY 2020 before the outbreak of the pandemic hurt large online auto platforms.

CarTrade reported a restated profit of Rs 101.07 crore in FY 2021, which was three times the profit of Rs 31.29 crore in the previous year. It turned profitable in FY 2019, and is the only auto platform to report a profit, compared to peer companies like Cars24, Cardekho and Droom.

Led by Chairman, Managing Director and CEO, Vinay Sanghi, CarTrade connects different stakeholders across the value chain, creating an automotive digital ecosystem of buyers, automakers, dealers, banks, insurance companies, and other stakeholders.

The company generates revenue from several business streams primarily comprising commission and fees, online advertising solutions, lead generation, technology-based services, and inspection and valuation services to OEMs, dealers, banks and other financial institutions and insurance companies.

Equity analysts are optimistic about the stock because CarTrade's business model allows it to use cash for acquisitions, apart from making technology investments to make the platform scale in a capital-efficient manner.

CarTrade gained immense support from institutional and non-institutional investors, with the stock getting oversubscribed by 20.29 times during the initial public offering (IPO) between August 9 and August 11. It raised Rs 2,998.5 crore.

Segment wise, its core revenue driver is commission and fees at Rs 142.50 crore in FY 2021, followed by online advertising solutions, lead generation, and technology-based services at Rs 88.20 crore. Inspection and valuation services brought in Rs 17.69 crore.

CarTrade has an asset-light business model, operating only 114 auto malls, a large majority of which are leased or rented from third parties, according to its Draft Red Herring Prospectus. It acquired Automotive Exchange (CarWale and BikeWale) in 2015.

CarTrade Tech is backed by several marquee institutional shareholders, such as Warburg Pincus, Temasek, JP Morgan, and March Capital through their affiliates Highdell Investment, MacRitchie Investments, CMDB II and Springfield Venture International, respectively.