CarTrade Tech Limited made its debut in the market on Monday with its initial public offering (IPO). The company plans to raise Rs 2,998.51 crore through its IPO. CarTrade Tech was incorporated in 2000 and is a multi-channel auto platform provider. The platform functions of a host of sorts that connects new car owners with used car owners in the buying and selling of their vehicles via the platform. It also works with a wide range of brands, dealers, vehicle OEMs among others.
Here are the top 10 things that you should know before diving into the CarTrade Tech IPO.
1) Overview of the CarTrade Tech IPO
The CarTrade Tech IPO has an issue size of Rs 2,998.51 crore. This consists of 18,532,216 equity shares with a face value of Rs 10 per equity share. The IPO is essentially an offer for sale (OFS) which stands at Rs 2,998.51 crore as mentioned before and has no fresh issue indicated for the IPO.
2) Important IPO Dates
CarTrade Tech IPO opened for subscription on August 9. It will stay open for trading and subscription till August 11, when it will close.
3) Price Band of the CarTrade Tech IPO
CarTrade Tech IPO has a final price band of Rs 1,585 to Rs 1,618 per equity share. It comes with a face value of Rs 10 per equity share as well.
4) CarTrade Tech Grey Market Premium
The grey market premium (GMP) for the CarTrade Tech IPO stood at Rs 450 on August 9. This indicated that the shares were trading at a premium of Rs 2,035 to Rs 2,068 per equity share on the unlisted grey market.
5) CarTrade Tech IPO Allotment, Listing Details
The company is planning to have its basis of allotment on August 17, 2021. The listing date for the issue will likely be on August 23, however, that is unconfirmed as of yet. The refunds for unsuccessful bidders will likely happen on August 18, after the allotment. The accreditation of shares to successful bidders will probably happen on August 20.
6) Object of the Issue
The objective of the CarTrade Tech IPO is to quite simply carry out the offer for sale. The company also plans to achieve its listing of equity shares on the stock exchanges.
7) The CarTrade Tech IPO Lot Size, Reservations
At the lower end of the lot, there are a total of 9 shares with an application cut-off amount o Rs 14,562. On the higher end of the lot size, there are 117 shares with Rs 189,306 as the cut-off application amount. From this, retail investors can apply for up to 13 lots at the higher end of the lot size. The qualified institutional buyers (QIBs) for the issue have a reservation of 50 per cent. The non-institutional investors on the other hand have a 15 per cent reservation of share. The retail investors have an allocation of 35 per cent reservation.
8) Company Profile
Following its incorporation in 2000, the company has worked with many popular brands in the automotive industry such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto, and AutoBiz. The company connects new car owners with used-car owners for the purpose of sales and purchase of vehicles. It also connects vehicle dealers, vehicle OEMs and other businesses concerned with the transaction of automotive. The company offers a variety of solutions across automotive transactions for buying, selling, marketing, financing, and other activities.
9) CarTrade Tech Company Financials
CarTrade Tech saw its revenue grow at a CAGR of 1.3 per cent during the period of FY19-21. Its EBITDA also saw some growth for the same period by a CAGR of 15.5 per cent. The profits of the company saw an increase of 133.8 per cent across FY19-FY21.
10) Company Strengths
The company has unique strengths as a leading platform in the automotive sales industry thanks to a synergistic ecosystem that it has cultivated. It also has a network of diverse and popular brands under its platform which aid in its efforts to offer a comprehensive range of services to customers. It is also a profitable and scalable business model.
As far as risks are concerned, the business may be affected by the ongoing Covid-19 pandemic. The company may also be impacted if the demand for a certain type of vehicle falls. There are also cyber-security risks that inherently come with any online platform.
Speaking on the CarTrade Tech IPO, Anand Rathi said, “CarTrade Tech Ltd has a unique business model with no listed peers in the market. Covid-19 has impacted its FY21 financials. At the upper end of the IPO price band, it is offered at 4.4x P/BV and 29.6x EV/Sales and 73.4x P/E if we exclude accounting adjustments for deferred tax and attribute it on equity, then the asking price is at a P/E of around 199.26x to its FY21 earnings with a market cap of Rs.74,159.5 million which shows the issue is priced exorbitantly.”
The firm then went on to add, “However, considering the future prospect of the company and it is also placed at a sweet spot as the first mover advantage we assign “Subscribe” Rating to this IPO investors can invest in this company with medium to long term perspective.”
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