CarTrade 'Cash Cow' In Reinvestment Arenas, Says B&K Initiating 'Buy'

Shares of CarTrade Tech Ltd. rallied in early trade on Wednesday after B&K Securities initiated coverage on the automobile company on Tuesday, with a target price of Rs 1,878, projecting a 21% upside.

The brokerage identified the company as a "classic non-linear business" with robust cash flows, especially post its acquisitions of SAMIL and OLX India. These moves have expanded its vertical and horizontal reach, while fortifying its cash-cow operations, like vehicle auctions and classifieds, as per the report.

The company also commands a substantial share in India's online automobile classifieds segment with platforms like CarWale and BikeWale, supported by 47 million MAUs, 93% of which are organic.

Here are the key growth catalysts, as per the report:

OLX India Acquisition: This has significantly boosted the company's horizontal reach across 12 non-auto categories, including furniture and real estate.

SAMIL Auctions: Offers counter-cyclical benefits, capitalising on asset repossessions.

The brokerage projects a revenue CAGR of 15% over fiscals 2019 to 2024, with an EPS growth of 491% in fiscal 2025 and consistent gains thereafter.

The stock is currently trading at 47 times the price to earnings value of fiscal 2026, as per the report.

• Dependency on auto advertising budgets, which remain under-indexed in India's digital landscape.

• Cyclicality in the auction business tied to macroeconomic trends.

The scrip rose as much as 4.64% to Rs 1,629 apiece, the highest level since Jan. 6, 2025. It pared gains to trade 3.98% higher at Rs 1,619.10 apiece, as of 9:20 a.m. This compares to a 0.16% advance in the NSE Nifty 50.

It has risen 124.6% in the last 12 months. The relative strength index was at 58.17.

Out of six analysts tracking the company, five maintain a 'buy' rating, and one suggests 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 14.9%.