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CarTrade Tech IPO- Drive or Avoid?

Created on 09 Aug 2021

Wraps up in 4 Min

Read by 3k people

Updated on 10 Sep 2022

A decade ago, could you think that online shopping would become so convenient and easier? No, right? But, today, things have changed. It has become such mainstream that people refrain from stepping out to buy stuff.

Anyway, we have a question for you... Do you buy automobiles online? You might be looking at its features and have complete research on that through various websites, but in the end, you would prefer to buy it through the showrooms. But, do you think ten years down the line, people would be comfortable buying vehicles online?

Well, you’ll soon know why this is relevant in this context. So, let's discuss the IPO of Car Trade Tech Ltd in detail. We shall start with the background of the company.

CarTrade Tech - Company Info

Founded in 2000, Car Trade Tech Limited is a multi-channel auto platform that covers different types of vehicles and their value-added services. The platform connects new and used car customers, car dealers, car OEMs, and other companies to buy & sell different types of cars. 

It comprises some famous brands such as  CarWale and BikeWale which were ranked number one on their search popularity when compared to their peers over the period from April 2020 to March 2021. Shriram Automall, which is also a brand of Car Trade Tech Ltd, is a leading platform for used vehicle auctions based on the number of vehicles. Some of its other brands are CarTrade Exchange, Adroit Auto, and AutoBiz.

It is a professionally managed company and does not have an identifiable promoter.

Now that we have the basic information about the company and what it does, let's now look at the financials of the company.

Financials of Car Trade Tech Ltd

We have seen the financials of the company through the table. We shall now discuss the key details of the IPO. 

Key Details of IPO

The IPO will remain live for subscription from 9th August to 11th August 2021. The shares will list on the stock exchanges, probably on August 23, 2021.

IPO Opening Date

Aug 9, 2021

IPO Closing Date

Aug 11, 2021

Issue Type

Book Built Issue 

Face Value

₹10 per equity share

IPO Price

₹1585 to ₹1618 per equity share

Market Lot

9 Shares

Min Order Quantity

9 Shares

Listing At

BSE, NSE

Issue Size

18,532,216 Eq Shares of ₹10

(aggregating up to ₹2,998.51 Cr)

Offer for Sale

18,532,216 Eq Shares of ₹10

(aggregating up to ₹2,998.51 Cr)

Application Details

The CarTrade Tech IPO market lot size is 9 shares. 

Application

Lots

Shares

Amount(Rs)

Minimum

1

9

14,562

Maximum 

13

117

189,306

 

Objectives of the Issue

The company aims to use 2998.51 crores to achieve the following objectives:

  • To make an offer for sale(OFS).

  • To achieve the benefits of listing gains 

We have seen the objectives of the issue. Now let's discuss whether we would have a safe ride or will it be a bumpy one?

Factors favoring the IPO

  • The first thing which might go in the company’s favor is the position it holds in the Indian markets. It is a leading platform for automobile sales. 

  • It has a scalable and profitable business scheme and model.

  • It comprises some famous and trustable brands such as CarWale, BikeWale, etc, and provides its customers with a swift experience.

  • It provides a number of services such as marketing and financing and is not just limited to buying and selling automobiles. 

  • Since it is a technology-driven company, it has a huge database. It focuses on the expectation and demands of the customers. For example, through the data it generates online as well as offline, it has a fair idea of what type of features and the specifications the customers expect generally.

We have seen the factors which favor the IPO but not every ride is as smooth as it seems to be. For a safe drive, we must also look into the risk factors associated with the IPO as well.

Risk factors in the IPO

As innovation in the automobile sector is a continuous process, it might be affected by a general decline in individual car ownership or sudden declines in demand for certain types of vehicles. The companies which work in the automobile sector mostly generate profits in only the third and fourth quarter due to the festive season.

Another drawback is that as most of their business is driven by technology, any disruption in their website or app can affect their business largely. And also, if they don't upgrade technology-wise, their servers might slow down. Due to the slow servers, the number of customers who used to visit the sites or apps might reduce and their experience might also get ruined.

Since various dealers list their bikes and cars on their websites and also run their ads, the fraudulent behavior of those dealers might also affect their business. And if any car or bike listed is indulged in illegal activity it may ruin their reputation.  

Final Words

We have seen that the growth of the company is because they run a scalable business in which their main focus is not just the selling of cars and bikes but also they enjoy benefits of the technology sector.

If we take an overview of this industry, we find that the Indian car market stands currently at the 5th position. When we have a look at the segment-wise break up of domestic markets, it is mostly dominated by the two-wheelers in terms of volume. India is expected to become the third-largest automobile market in the world in terms of volume by 2025.

It should not be wrong to say that the future looks good and one might also be able to get large listing gains. The company can be decent as well from a long-term point of view. However, you must research, and only then, invest.

So what do you think? A long drive, a short one, or a pass? Tell us in the comments.

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A Keen Learner. Tiny, brainy, and studious, this quiet one stays in her zone until she pops. And once she does, boy, are her comebacks snappy! There is no financial question that she can't answer through her magical blog-writing. 

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