CarTrade IPO Analysis BUSINESS OVERVIEW, RELEASE DATE

CarTrade IPO Analysis: BUSINESS OVERVIEW, RELEASE DATE, GMP, PRICE BAND

Online auto classifieds stage CarTrade has documented a draft red herring prospectus (DRHP) for an initial public offering (IPO) with the capital market regulator SEBI to raise around Rs 2,000 crore. The offer involves 26.96 per cent of post-offer settled up value share capital. The face value of value shares is Rs 10 each.

CarTrade is set to join the significant rundown of trendy innovation centred startups, including Zomato, Nykaa, PolicyBazaar and Flipkart, which are peering toward the essential market for postings.

What is CarTrade?

CarTrade is an automotive gateway for vehicles. Clients come to CarTrade to purchase new or used vehicles or to sell their vehicles. They can likewise research our material and utilize our tools and features, for example, vehicle surveys, value guides, vehicle particulars, vehicle pictures, used vehicle stock, car cash offers and exchange devices. They can enquire about another or used vehicle and we interface them to another or utilized vehicle seller or OEM.

CarTrade is heavily invested by the American private equity giant Warburg Pincus, Singapore’s state financial backer Temasek, JPMorgan and March Capital Partners.

Some financial points of CarTrade?

The IPO comprises an offer for sale of 1.61 million shares by CMDB II, up to 5.38 million offers by Highdell Investment, up to 3.57 million shares by Macrithie Investments Pte., up to 1.12 million shares by Springfield Venture International and 1.83 million by Bina Vinod Sanghi himself.

As of now, CMDB II holds an 11.93% stake in the company, Highdell Investment, MacRitche Investment Pte., and Springfield Venture International hold 34.44%, 26.48% and 7.09% stake in the company.

Axis Capital, Citigroup Global Markets India, Kotak Mahindra Capital and Nomura Financial Advisory and Securities India are the books formulating lead chiefs to the issue.

For the financial year 2020, the firm announced revenue of ₹298.28 crores versus ₹243.28 crores a year prior. The net benefit of profit for the period remained at ₹7.62 crores against ₹9.51 crore a year prior.

CarTrade had gotten a 51% stake in Shriram Automall in January 2018 for around ₹157 crores. In 2015, it had acquired adversary CarWale in a transition to unite the online auto classifieds industry.

Understanding CarTrade business model :

CarTrade works on a resource-light business model, operating just 114 auto-shopping centres, a vast lion’s share of which we rent or lease from outsiders. CarTrade has invested altogether in building innovation stages that can oversee significantly increased offerings without requiring sizable extra investments, and our growing scale has brought about a reduction of the portion of fixed expenses.

One of the significant upgrades has been in the EBITDA margins and benefit of the company. “This operating influence has helped drive development in our Adjusted EBITDA margins as our revenues have scaled. For the nine months finished December 31, 2020, and financial years 2020, 2019 and 2018, our benefit before charge margin was 14.52%, 12.22%, 13.28% and (1.97)%, separately, while our Adjusted EBITDA margin was 26.46%, 22.71%, 24.42% and 6.00%, individually.

The company believes that its investments in innovation have made its different stages and administrations adaptable without high capital consumption. The company added that the resource-light business model has permitted it to utilize cash on the accounting report for acquisitions, which is one of its key methodologies.

One of the significant areas of cost-cutting has been ads, marketing and deals promotion costs, which added up to INR 7.7 Cr from March 2020 to December 2020, which came up to 4.11% of the complete income in the period. In correlation, in FY2020, CarTrade spent INR 24 Cr (7.56% of its all out income). 

The emphasis on bringing in clients without spending on marketing brought about SEO streamlining and targeting search keywords through content marketing and research on Carwale and Bikewale. This came about in 88.44% of remarkable organic traffic coming naturally to CarTrade destinations in the financial year 2021.

NOTE- CarTrade noted that on a united level, the company detailed revenue of over INR 318 Cr, which brought about a net profit of INR 31.2 Cr. Further, till December 2020, the company has announced an income of INR 189.6 Cr for FY 21 (9 months) with a net benefit of INR 85 Cr. The company has been profitable since FY2019.

What would be the price band of CarTrade IPO?

The price band for the offer would be marked through a book-building measure. The issue price is yet to be released formally by the company and according to the expectations, it will be huge beyond our suspicions.

We will update the article as soon as we get the price information from a trusted source. 

Axis Capital, Citigroup Global Markets India, Kotak Mahindra Capital and Nomura Financial Advisory and Securities India are the books formulating lead chiefs to the book building of the issue.

What would be the Grey Market Premium of CarTrade IPO?

GMP is not announced yet, But when there will be official information about the GMP we will update the price, make sure to have your notification turned on to get the latest update from our website.

What will be the release date for the CarTrade IPO?

The Initial Public Offer is opening on Aug 9, 2021, and the closing date is August 11th, 2021.

How to apply for CarTrade IPO?

Now, you can apply for the IPO through the normal IPO application process using Zerodha, Upstox or any other broker and if you don’t know how to apply for IPO read our blog on ‘Easy Step by Step guide to apply for IPO in India’.

But, honestly speaking getting allotted for an IPO is like winning a lottery and it depends on your luck. If you do get allotted then read our blog on ‘How to make money using IPO in India’.

Application of IPO is subject to the block of funds with the bank account so during UPI ID application enable the Auto Pay option.

Conclusion :

With rising development of the auto market, India’s used (utilized) vehicle market has additionally advanced throughout the long term. Used vehicle market filled consistently in 2020, touching 4.4 Mn units. India’s trade-in vehicle market is assessed to reach between 6.7 Mn to 7.2 Mn units in deals each year by 2022, with the value of the fragment fixed at INR 50,000 Cr.

The data is suggesting strong growth opportunities for the company in the coming years.

I think it will be another hit IPO of 2021 with long term growth. 

Comment your thoughts on the IPO down below

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Written by
Sourav Suman
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Sourav Suman

Blogger, currently pursuing B.A LL.B, Investor, and Personal Finance Enthusiast...

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