IGI Logo

Salient features of the IPO:

* Online auto classified platform CarTrade Tech Ltd. (CarTrade), is coming up with an IPO to raise up to Rs. 3,000cr, which opens on 9th Aug. and closes on 11th Aug. 2021. The price band is Rs. 1,585 – 1,618 per share.

* The issue only has OFS portion, thus the company will not receive any proceeds from this IPO.

* In Apr. 2021, the company executed private placement of shares, which were at discounts to the offer price. Also few of the warrants were converted into shares, which were at significant discount to the offer price.

Key competitive strengths:

* Leading marketplace for automotive sales with a synergistic ecosystem

* Brands and customer experience driving powerful network effects

* Proprietary end-to-end technology platforms

* Focus on data science to provide superior solutions

* Profitable and scalable business model

* Founder-led management team

Risk and concerns:

* Unfavorable government policies

* Continued subdued economic activities

* Poor business from marketing activities

* Difficulty in adding new revenue streams

* Rise in interest rates

* Competition

Below are a few key observations of the issue:

* India was the fifth largest car market in the world in 2020 and is expected to become the third largest automotive market in the world in terms of volume by 2025. Annual new car sales in India are expected to grow from 2.7mn units in FY21 to 4.4mn units in FY26, while used car sales are expected to grow from 4.4mn units in FY20 to 8.3mn units in FY26. Moreover, new two-wheeler sales are expected to grow from 15.1mn units in FY21 to 26.6mn units by FY26.

* The entire automotive ecosystem is highly fragmented, complex and riddled with challenges. Vehicles reach end buyers through several channels and after going through multiple intermediaries and exchanges. The multiplicity of transactions creates potential inefficiencies that negatively affect the overall system. Online platforms are present across new and used vehicles, which help in streamlining the entire ecosystem. According to the RedSeer Report, more than 90% of customers in India use online channels for research before buying a new or used car, with online platforms being rated higher than offline platforms in terms of quality and trust.

* CarTrade is a vehicle online auto portal, which plays an important role across the auto value chain by connecting different stakeholders like OEMs, dealers, financial institutions, consumers etc. According to the RHP, it was the number one online auto portal for both cars & two-wheelers (based on the online searches) in FY21 and also one of the leading used vehicle auction platforms (based on number of vehicles listed for auction) in FY20. Also among the key competitors, it was the only profitable online auto platform in FY20. The company is backed by marquee institutional shareholders like Highdell Investment (affiliate of Warburg Pincus), MacRitchie Investments (an affiliate of Temasek), JP Morgan and March Capital.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://choicebroking.in/disclaimer

Above views are of the author and not of the website kindly read disclaimer