CarTrade Tech lists 1% below issue price at Rs 1,600 per share

At 10:01 am, CarTrade Tech was trading at Rs 1,579.70, down 2.4 per cent to its issue pricee of Rs 1,1618 per share

CarTrade Tech made a weak debut on the bourses as the company’s shares listed at Rs 1,600, 1 per cent below its issue price of Rs 1,618 per share on the BSE on Friday. On the National Stock Exchange (NSE), the stock opened at Rs 1,599.80, the exchange data shows.

At 10:01 am, CarTrade Tech was trading at Rs 1,579.70, down 2.4 per cent, after hitting a low of Rs 1,548 in intra-day trade post its listing on the BSE. A combined around 4.1 million equity shares changed hands on the counter on the NSE and BSE. In comparison, the S&P BSE Sensex was down 0.49 per cent at 55,356 points.

The initial public offering (IPO) of CarTrade Tech, a company that operates online platforms for buying and selling of vehicles, had received a strong response from the investors, with issue garnering 20.3 times subscription. The qualified institutional buyers (QIBs) portion was subscribed 35.45 times, the non-institutional investors (NII) investor portion was subscribed 41 times, and the retail portion was subscribed 2.75 times.

CarTrade Tech is a multi-channel auto platform provider company. The company operates various brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto, and AutoBiz. The platform connects new and used automobile customers, vehicle dealers, vehicle OEMs, and other businesses to buy and sell different types of vehicles. The company offers a variety of solutions across automotive transactions for buying, selling, marketing, financing, and other activities.

According to ICICI Securities, with 90 per cent Indian customers estimated to be using online channels for research before buying a new or used car, the space is susceptible to market share gains by organised players (particularly ones with end-to-end presence) at the expense of current unorganised, fragmented industry segments.

In this regard, CarTrade Tech stands to benefit courtesy its suite of strong brands. CarWale and BikeWale were ranked No. 1 in relative online search popularity compared to peers during FY21, while as of FY20, Shriram Automall was a leading used vehicle auction platform based on the number of vehicles sold.

That said, Nirmal Bang Securities cautioned that many companies have entered the vehicle platform business since 2014 including the bigger competitors like Cars 24 and Droom who, just like CarTrade, are backed by multiple marquee global investing firms. An increase in aggression by competition fueled by large amounts of global appetite to participate in this industry in India could impact the positioning of CT and its profitability, the brokerage said. Although it had assigned a Subscribe rating on the company in its IPO note owing to CarTrade's well-positioned balance sheet and plans to capture adjacent business opportunities.