CarTrade Tech IPO: All You Need To Know

Warburg Pincus and Temasek-backed CarTrade Tech will launch its three-day initial public offering on Monday as private equities and existing shareholders look to pare stake in the marketplace for used vehicles.

Objective

The issue is sale of secondary shares to public, and the funds raised will go to the selling shareholders and not the company.

Business

The company is a multi-channel auto platform that operates under several brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.

Through these platforms, it allows new and used automobile customers, dealerships, original equipment manufacturers and other businesses to buy and sell vehicles online. The company also aims to create an automotive digital ecosystem to connect customers, OEMs, dealers, banks, insurance companies and other stakeholders.

CarTrade Tech offers marketing, buying, selling and financing of new and pre-owned cars, two-wheelers as well as pre-owned commercial vehicles and farm and construction equipment.

The company earns 57% of its revenue from commission and fees from auctions and remarketing services. Its other revenue sources include online advertising solutions, lead generation, inspection and valuation services.

Financials

CarTrade Tech’s revenue from operations fell in the fiscal ended March 2021. Its profit attributed to owners, however, surged during the period, led by deferred tax write-back worth Rs 63 crore. The company has been profitable since fiscal 2019 and has zero debt.

Peers

There are no listed companies in India that engage in a business similar to that of CarTrade Tech. Among unlisted competitors are brands such as Cars24 Services Pvt. Ltd., CarDekho and BikeDekho (Girnar Software Private Ltd.), Droom Technology Pvt. Ltd. and Mahindra First Choice Wheels Ltd.

Risks

• The Covid-19 pandemic may affect its business, results of operations, cashflow and financial condition in the future.

• The company may be adversely impacted by a fall in individual car ownership or sudden decline in demand for certain types of vehicles.

• It may experience disruptions, failures or breaches of its technology platforms.

• An actual or a perceived failure to protect personal information and other data could damage its reputation and brands.