IPO Note - CarTrade Tech Ltd By Nirmal Bang
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BACKGROUND
CT (Cartrade Tech) is a multi-channel auto platform with coverage and presence across vehicle types and value-added services. Its platforms operate under several brands: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz. Through these platforms, CT enables new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell their vehicles in a simple and efficient manner. CT’s vision is to create an automotive digital ecosystem which connects automobile customers, OEMs, dealers, banks, insurance companies and other stakeholders.
Details and Objects of the Issue
The total issue size is Rs. 2,999 Cr constituting offer for sale of up to 1.85 Cr equity shares by investors. The offer shall constitute 40.4% of the post-offer paid-up equity capital of the company.
Investment Rationale
* Strong growth in used vehicles industry to act as a tailwind.
* Strong competitive positioning driven by superior customer experience, brand and powerful network effect.
* CT is the only profitable player among its key competitors.
* CT shall monetize value added services and untapped opportunities.
Valuation and Recommendation
CT is the only profitable player in India and one of the few players internationally in the vehicle platform space. CT owns the No.1 ranked platforms in their respective categories i.e. Carwale & Bikewale, which instills confidence in the sustainability of its growth which is powered by this network effect. Further, with a war-chest of Rs. 668 Cr in balance sheet, CT is well positioned and plans to capture adjacent business opportunities such as insurance, financing, servicing of vehicles, accessories and refurbishment cum sale of cars. We believe CT offers an attractive opportunity to participate in a new age business with a leading vehicle platform company at P/B of 4.2x & M.Cap/Sales of 27x. We recommend “SUBSCRIBE” to the issue.
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