CarTrade Tech hits new all-time low, stock down 46% from its issue price

Since October 29, 2021, the market price of CarTrade Tech slipped 24 per cent after the company reported a net loss for the second straight quarter of current fiscal.

Shares of CarTrade Tech hit a new low of Rs 881, down 1 per cent on the BSE in Tuesday’ intra-day trade in an otherwise firm market. The stock has now fallen as much as 46 per cent from its issue price of Rs 1,618 per share.

The stock of the company that operates online platforms for buying and selling of vehicles was quoting at its lowest level since its listing on August 20, 2021. It hit a high of Rs 1,610 on listing day, failing even to touch its issue price. In comparison, the S&P BSE Sensex was up 1.7 per cent at 57,714 at 01:32 pm.

The major disappointing factor from CarTrade was that its IPO was 100 per cent offer-for-sale (OFS) therefore no money going into business for future expansion while high competition and low entry barriers are the other risk factors.

Since October 29, 2021, the stock price of CarTrade Tech has slipped 24 per cent after the company reported a net loss for the second straight quarter of current fiscal. The benchmark index was down 3.6 per cent during the same period.

For April-September period (H1FY22), CarTrade Tech posted a net loss of Rs 81.47 crore as against a net profit of Rs 63.57 crore during the same period of FY21. For fiscal FY21, the company had posted net profit of Rs 103.40 crore. The company’s total revenue including other income grew 46 per cent year-on-year (YoY) to Rs 150.75 crore, from Rs 103.26 crore in H1FY21. Adjusted earnings before interest, tax, depreciation and amortization (ebitda) has more-than-doubled to Rs 33 crore from Rs 16.18 crore.

CarTrade Tech’s platforms operate under several brands: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz. Through these platforms, it enables new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell its vehicles in a simple and efficient manner.

The tech-based market space is changing rapidly and many start-ups are launching their online solutions. Inability to keep the pace with advances in technology may reduce customer traffic and impact business performance. The failure to provide quality content or quality vehicles on platforms could hamper the image of various brands are key risks & concerns, Ventura Securities had said in IPO note.

CarTrade Tech may be adversely affected by a general decline in individual car ownership or sudden declines in demand for certain types of vehicles. The extent to which the COVID-19 pandemic may affect the business, results of operations, cash flows and financial condition in the future is uncertain and cannot be predicted, HDFC Securities had said in IPO note.

The company’s actual or perceived failure to protect personal information and other data could damage the reputation and brands. If the company is unable to keep pace with advances in technology or develop and introduce new and complementary products and services in a timely manner, customers may reduce its use of, or stop using, its services, the brokerage firm had said.