CarTrade Tech Ltd - IPO Note

CarTrade Tech - IPO Note
IPO
31/07/2021

CarTrade, founded in 2009, is a platform for potential buyers and sellers to register and buy and sell used cars as well as new cars. The founder Vinay Sanghi, is a veteran of the secondary car market, having spent a long time with Mahindra First Choice. In India, the used car market is estimated at $27 billion (or over Rs.200,000 crore) and growing 15% annually.

The CarTrade platform runs 2 sub-portals. CarTrade.com caters to the consumers in buying and selling used and new cars. The B2B CarTradeExchange.com helps car dealers source leads and fulfil client requirements using the ecommerce channel more effectively. 

Key terms of the IPO issue of CarTrade Tech
 

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

09-Aug-2021

Face value of share

Rs.10 per share

Issue Closes on

11-Aug-2021

IPO Price Band

To be Finalised

Anchor Placement

06 Aug-2021

Fresh Issue Size

Nil

QIB Quota

75%

Offer for Sale Size

185.32 lakh shares

HNI Quota

15%

Total IPO Size

185.32 lakh shares

Retail Quota

10%

Listing on

BSE, NSE

 

 

Data Source: IPO Filings

CarTrade has a B2C component and a B2B portion component. The company is funding-backed by marquee PE names like Warburg Pincus, Temasek of Singapore, JP Morgan and March Capital. Its sub-platforms like CarWale.com and BikeWale.com are ranked on top in relative search popularity.

In the digital world, profits are a rarity and CarTrade is one of the rare instances of profit making digital business model. Between its 3 B2C platforms; CarTrade, CarWale and BikeWale, it has around 29.9 million unique visitors in a month with more than 87% organic visitors. That has the potential for high ROI penetration per customer.

CarTrade offers information, comparison, execution and fulfilment. The portals offer used car information, on-road dealer prices, certified used cars, expert reviews as well as a wide choice for buyers and sellers to make a most judicious choice. This is still a highly fragmented business and subject to stiff competition from the unorganized sector.

In the Indian market, major competitors for CarTrade include Cars24, Quickr, OLX, Droom and Mahindra First Choice. CarTrade has made inorganic acquisitions of CarWale, Axel Springer and Vehicle auctioning platform, Shriram Automall.

A quick look at the CarTrade Tech Financials

Here is a quick look at the financials of CarTrade, and we have only captured key financial parameters of relevance to the CarTrade IPO for the last 4 fiscal years. The profits in the latest year include a deferred tax credit of Rs.63 crore and hence may not be strictly comparable. 

Parameter

Fiscal 2020-21 *

Fiscal 2019-20

Fiscal 2018-19

Fiscal 2017-18

Total Assets

Rs.1,882 cr

Rs.1,470 cr

Rs.1,427 cr

Rs.1,357 cr

Revenues

Rs.223.43 cr

Rs.298.28 cr

Rs.243.28 cr

Rs.123.55 cr

Net Profit / Loss

Rs.77.92 cr

Rs.21.88 cr

Rs.16.69 cr

Rs.(9.10) cr

Data Source: RHP (* Revenues for FY21 is 9-months annualized)

Who will sell in the OFS of CarTrade

A valuation view would be possible only once the price is known but that will be announced in the coming week. Here are some of the key shareholders who will be selling in the OFS. The entire issue of shares by CarTrade will be by way of OFS and no fresh funding will come into the company from the ipo.

The key selling shareholders in the OFS include CMDB, Highdell, MacRitchie and Springfield. They are likely to account for a chunk of the holdings with the promoter group selling shares and other connected persons also participating in the OFS.

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