CarTrade Tech hits new low since listing; down 11% from issue price

CarTrade Tech hits new low since listing; down 11% from issue price

Shares of Tech were trading lower for the third straight day, down 2.4 per cent at Rs 1,441.60 on the BSE in intra-day trade on Thursday, in an otherwise firm market. The stock was quoting at its lowest level since its listing on Friday, August 20, 2021. With the past three days' 8.7 per cent fall, the market price of Tech has declined 11 per cent from its issue price of Rs 1,618 per share.

Tech, a company that operates online platforms for buying and selling of vehicles, had made a weak debut on the bourses as the company’s shares ended at Rs 1,500, a 7 per cent discount to its issue price on the BSE on day of listing. However, the initial public offering (IPO) of the company had received a strong response from the investors, with the issue garnering 20.3 times subscription. The IPO was an offer-for-sale worth Rs 2,998 crore. The company had raised Rs 900 crore from anchor investors ahead of its issue.

On August 20, there was some institutional buying in the stock post listing as Goldman Sachs Trust, Jupiter India Fund and Plutus Wealth Management bought shares worth Rs 275 crore. However, the names of the sellers were not ascertained.

CarTrade Tech is a multi-channel auto platform provider company. The company operates various brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto, and AutoBiz. The platform connects new and used automobile customers, vehicle dealers, vehicle OEMs, and other businesses to buy and sell different types of vehicles. The company offers a variety of solutions across automotive transactions for buying, selling, marketing, financing, and other activities.

An increase in aggression by competition fueled by large amounts of global appetite to participate in this industry in India could impact the positioning of CarTrade Tech and its profitability, the brokerage firm Nirmal Bang Securities said in IPO note.

On the financial front, the company’s revenue in financial year 2020-21 (FY21) has seen de-growth owing to the Covid-19 impact but is expected to stabilize in the medium term. Amongst the industry players, CarTrade is the only profitable company which is a positive sign, according to analyst at Religare Broking.

CarTrade shares make a weak debut, list below issue price

Shares of CarTrade made a weak stock market debut on Friday by listing at ₹1,599.8 per share on the NSE, a discount to its issue price of ₹1,618 apiece. On BSE, CarTrade shares were trading around ₹1,579, down more than 2% from its IPO issue price. The scrip hit a low of ₹1,476 in early deals.

The initial public offer (IPO) of the online auto classified platform was subscribed 20.29 times on the closing day of the subscription. The three-day issue that closed on August 11, received bids for 26,31,74,823 shares against 1,29,72,552 shares on offer, as per exchanges data. The category for qualified institutional buyers (QIBs) received 35.45 times subscription, while the portion for non-institutional investors was subscribed 41 times. The retail individual investors (RIIs) quota was subscribed 2.75 times.

Santosh Meena , Head of Research, Swastika Investmart said that CardTrade debuted secondary market on weak note amid risk-off sentiment in equity markets. “There were some concerns like 100% FPO and low entry barrier business therefore we recommended investors to subscribe to it only for listing gain as new edge tech companies are in demand but the listing is disappointing where we advise only aggressive investors to hold this stock in their portfolio otherwise many other good opportunities are available in the market," Meena said.

The CarTrade platform allows customers to buy and sell used cars as well as new cars. The IPO comprised a pure offer for sale (OFS) of 18.53 million shares by existing shareholders and promoters. The company had raised ₹900 crore from anchor investors ahead of its issue.

Rahul Sharma, Co- Founder, Equity99 said, “CarTrade Tech Ltd is a multi-channel auto platform provider company. The company operates various brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto, and AutoBiz. The platform connects new and used automobile customers, vehicle dealers, vehicle OEMs, and other businesses to buy and sell different types of vehicles. The company offers a variety of solutions across automotive transactions for buying, selling, marketing, financing, and other activities.”

The company generates revenues from commission and fees from auctions and re-marketing services, online advertising solutions, lead generation, technology-based services to OEMs, dealers, banks and other financial institutions, and inspection and valuation services. Founded in 2009, CarTrade is backed by marquee investors – Warburg Pincus, Temasek, JPMorgan, and March Capital.

The firm is a multi-channel auto platform with coverage and presence across vehicle types and value-added services through its brands, CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto, and AutoBiz.

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CarTrade IPO shares to debut tomorrow: What could be the listing premium?

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Leading multi-channel auto platform CarTrade Tech is expected to make a decent debut on the bourses considering its business model, the first-mover advantage in the sector and future growth prospects. Equity shares will list on the BSE and NSE on August 20.

The initial public offering of CarTrade saw a strong subscription during August 9-11, getting subscribed 20.29 times driven by institutional and non-institutional investors. The reserved portion of qualified institutional buyers was subscribed 35.45 times and that of non-institutional investors witnessed 41 times subscription. The retail portion was booked 2.75 times.

The company raised Rs 2,998.51 crore through its public issue that was a complete offer for sale by existing selling shareholders.

“Considering decent response from QIB and HNI, we assume listing would be with reasonable upside around Rs 1,780-1,800 levels, which translates to 10-12 percent premium over the upper end of the IPO price Rs 1,618 per share,” Prashanth Tapse, VP Research at Mehta Equities, told Moneycontrol.

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“A decent listing gain seems to be justified as the issue being the first-of-its-kind business model in the segment and the only profit-making multi-channel auto platform business,” he said.

Astha Jain, Senior Research Analyst at Hem Securities, is expecting a 5-7 percent gain on the listing of CarTrade Tech.

Also read - CarTrade IPO: Grey market premium on shares declines significantly ahead of listing

Currently, CarTrade Tech shares traded at a premium of Rs 150-170 in the grey market, resulting in a trading price of Rs 9.3-10.5 percent over the issue price of Rs 1,618 per share, the IPO Watch and IPO Central data showed.

CarTrade Tech is a multi-channel auto platform with coverage and presence across vehicle types and value-added services, operating under several brands namely CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.

Through these platforms, the company enables new and used automobile customers, vehicle dealerships, vehicle original equipment manufacturers (OEMs) and other businesses to buy and sell their vehicles in a simple and efficient manner.

The company generates revenues from several business streams primarily comprising commission and fees from auction and remarketing services, online advertising solutions, lead generation, and technology-based services.

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