by In this article, we are going to do a Fundamental Analysis of CarTrade Tech Ltd. I am talking about CarTrade technology, which is bringing its own IPO from Monday which means from Monday, you can subscribe to its IPO.
Before subscribing to an IPO, you get lots of doubts and questions for which you need answers while doing Fundamental Analysis of CarTrade Tech Ltd, which we will cover in today’s article.
let’s start with the article, where we will talk about CarTrade Tech.
Objective of this CarTrade Tech
- Firstly, to carry out an offer for sale for existing shareholders.
- Secondly, to achieve the benefits of Listing benefits of different companies
- Third, It has been said other General Corporate purposes because of which the company is about to get IPO.
About CarTrade Tech Ltd Company’s
The company was incorporated in 2000. The company’s name was ‘Kaymo Fastener Company Private Ltd’. After this, in 2009, the name of the company was changed and the company’s name became MXC Solutions Pvt Ltd.
Then by 2021, the name changed to CarTrade Technologies Private Limited Company. The company is a multichannel auto platform that operates with multiple brands and caters to many audiences As we know, the company has multiple brands like CarWale, CarTrade, Shriram AutoMall, BikeWale, CarTrade Exchange, Adroit Auto, and also AutoBiz. So, these are the brands which the company operates under its name.
The company operates in Omnichannel. That means the company has online stores through which you can buy or sell cars. Like I told you, apart from this, the company also has an offline presence Where the company started the car mode to sell its vehicles.
Fundamental Analysis of CarTrade Tech Ltd
Fundamental Analysis of CarTrade Tech Ltd Consists of the following things:
- Company’s Offerings of CarTrade Tech.
- How CarTrade Tech Ltd Company Earns Revenue?
Company’s Offerings of CarTrade Tech
First I will talk about the CarWale and the CarTrade.
These are online websites that cater to different audiences. For example, If you want a new car, and want to research it, then you can use these platforms for such research. Other than this, they deal with OEMs and finance company
They connect using these two websites. These 2 platform deals with finance company like, if you need any finance to buy a car, then those options are available. You can even buy or sell second-hand vehicles from here.
Similarly, if I talk about the BikeWale website, which owns a branding company and likewise, you can contact 2-wheelers buyers or sellers here, or, you can reach OEMs.
That is similar to CarWale or CarTrade where you get all information about 4-wheeler. Similarly, you can do 2-wheelers in BikeWale.
If I talk about Shriram Automol, then it is used for selling pre-owned cars or second-hand vehicles.
CarTrade Tech LtdExchanges
It is quite an interesting offering for you all which is important to know. Now imagine, if you want to sell your vehicle, where, you want to auction your vehicle that is, you will sell the car to the highest bidder. So, this kind of action is done on this company’s platform for its different audiences.
Adroid Auto
The company offers you to do a valuation of your cars and bikes to know the true value of it. If you want to go to the second-hand market to sell your vehicle.
How CarTrade Tech Ltd Company Earns Revenue?
The next important question that comes for investors is how does this CarTrade Tech LtdCompany earn revenue?
- The company first charges its commission and fees from the auction and remarketing services used on vehicles.
- Second Earning is from online advertising is done for OEMs, dealers, banks, and others like, if you go to CarWale or CarTrade websites, you get finance options other than this, many other companies advertise there. The whole advertisement revenue goes to the Company.
- Thirdly, you can see, there is Lead generation work too like, if anyone wants finance or OEM, then the platform helps in generating leads for them. Like, if you put data about finance requirements to buy a car, the company does the lead generation work for other companies which brings revenue to the company as well.
Next, they provide technology-based services to their participants last, we will talk about Inspection and Valuation services.
Whenever people buy or sell their cars or bikes, the most important is to know their true value. So, the company provides inspection and valuation services this benefits the sellers as well, as he gets to know the true value of his vehicle, and the buyer also knows at what value he should buy which vehicle. This company provides these services from where it generates revenue.
If I talk about June 2021, CarWale, CarTrade, and BikeWale websites, together they saw an average of more than a 27million visitors per month. How big is the audience to whom all this company caters monthly?
What is the Future Growth of CarTrade Tech Ltd Industry?
What growth has the industry seen? What are the prospects for the industry in the coming time?
If I talk about India’s car market, then it’s the world’s 5th largest car market. It is expected that from 2021 to FY26, the CAGR will grow 10% compounded. So, the market is big and it is expected to grow in the future.
If I talk about the 2-wheeler market, a compounding growth of 8% is expected from 2021 to 2026.
So friends, until now, we talked about the whole car market. But if I talk about the second-hand car sales in the car market then, it is still quite underpenetrated. If we talk about the whole car market sales, then second-hand sales contribute about 16% of the sales.
Thus, this industry is still underpenetrated and it is also expected that it will grow 11% compounded. If I talk about second-hand sales, then this market has totally fragmented that means, this market is operated wholly by unorganized players here, CarTrade has a great opportunity to consolidate it and how it can bring it from an unorganized sector and acquire a good market share in the coming future.
Financials of CarTrade Tech LtdCompany’s
So, now we will talk about the company’s financials and how it performed to date. As you can see on the screen, if I talk about assets, then it had 1427 crores worth assets in 2019 whereas it reached 1930 crores worth in 2021.
That means the companies assets kept on growing. after this, I will talk about the company’s revenue. in 2019, the companies revenue was 266 crores of which 25crores were profit while in 2020, it generated 318 crores of revenue with a profit of 31 crores.
In 2021, it generated less revenue of 281 crores with an improvement in profit of 101 crores.
I want to say that the sector where the company operates, was severely impacted by covid and lockdown. so, the tip which you can see in the numbers is the result of covid as the primary reason.
company’s operating profit margin is nearly 18%, which can be considered good, but cautiously, you should see the company’s Return on equity is nearly 5%.
If you invest in the upcoming time, then you need to check how the company improves its ROE no.
The company’s earning per share is 19, which means, the price at which the wants to list itself is demanding a PE value of around 84 i.e, the company wants to list on the premium value.
if I talk about the debt-equity ratio, then it is 0.095 approximately which is negligible, so you can consider it a debt-free company
After talking about financials, let me talk about the company’s investment pros and cons.
Pros and Cons of CarTrade Tech Ltd
1st is that in the segment in which the company operates, it is the only profitable company and the segment it addresses to is totally an unorganized segment. so it is advantageous over its peers.
2nd pro is that today if you buy anything in terms of bike or car, you research a lot and internet penetration has improved over time, therefore.
The brands under the company like CarWale and CarTrade, fetch a lot of organic audiences which is approximately 88%.other than this, over a 27million people visit their website which is a huge no. Through its content, the company is doing brand awareness so we can hope with much more internet penetration, the company’s brand awareness will improve.
Next, is that the company’s business model is technology-driven and is a very asset-light model. Other than this, I was talking about company’s debt, the company has negligible debt which gives an advantage over its peers.
Lastly, I want to talk about company’s second-hand market. As I said earlier, this segment is under-penetrated and the CAGR growth which is expected from this is also a good no. If this segment grows in the upcoming time, then the company can grow exponentially.
Friends, as you all know the company faces tough competition in the second-hand market from its established players like Maruti Suzuki True Value, Mahindra First Choice, and many others who are bringing in the second-hand segment to acquire this market as well.
To check how the company tackles this competition in the future is very important for all of you.
Next, let’s talk about the Company’s Business Model which is dependent on auto segment growth.
If it doesn’t grow in that, then it itself cannot grow. It is important to see how the company diversifies its business and how it shifts its dedicated growth to other segments.
If I talk about its 1 share price, it’s Rs.1585 to Rs. 1618 and for 1 lot, you have to bid for 9 shares.
the IPO size is nearly 2998 Cr, and its total offer for sale i.e, the company’s promoters and existing stakeholders want to sell their stakes to IPO.
The tentative date for listing is kept 23rd August and it is seen that the listing dates are often changed.
One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
I hope you like Fundamental Analysis of CarTrade Tech Ltd, and if you like the article, then do like and comment. happy investing.
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