JM Financial downgrades CarTrade; stock bleeds 19%, 'Sell' call explained

JM Financial on CarTrade: CarTrade Tech (CarTrade) shares were under pressure on Wednesday, September 10, 2025, with the stock nosediving 18.68 per cent to hit an intraday low of ₹2,222.35 per share. 

 

Around 11:20 AM, the CarTrade shares continued to trade lower, down 13.41 per cent at ₹2,366.55 levels. In comparison, BSE Sensex was trading 0.56 per cent higher at 81,555.86 levels.  FOLLOW LATEST STOCK MARKET UPDATES LIVE

JM Financial downgrades CarTrade

 

Domestic brokerage JM Financial downgraded CarTrade to a ‘Sell’ rating from ‘Hold’ with a September 2026 target price of ₹2,350, implying around 14 per cent downside from current levels. The brokerage cited a combination of valuation concerns, reliance on cyclical B2B revenues, and emerging competitive threats from generative AI tools.

 

According to JM Financial analysts, “CarTrade’s share currently trades at c.43x FY27E Ebitda multiple, too rich for a company that still generates almost the entirety of its revenue from B2B clients.” While the company operates B2C platforms, the analysts highlighted that these do not fully insulate it from fluctuations in B2B demand.

 

The brokerage also pointed to the New Auto segment, noting that “a demand boost post-GST cuts does not necessarily translate into a linear rise in revenue.” OLX, which is expected to grow 15 per cent Y-o-Y in Q2FY26, “was expected and does not result in an upgrade to our forecasts,” JM Financial said.

 

New auto segment growth to moderate

 

CarTrade’s New Auto segment has seen a sharp uptick in Y-o-Y growth, averaging 32.9 per cent over the past three quarters. The surge, analysts said, came despite relatively muted overall demand, driven by OEMs’ ability to deliver vehicles consistently and normalised advertising spends.

 

Thus, JM Financial expects growth to moderate going forward, stating, “OEM ad spends as a percentage of sales have now reached normalised levels and GST benefit is unlikely to cause further boost. Hence, New Auto segment revenue growth would return to early-twenties levels over the coming quarters.” The brokerage raised the segment’s multiple to 40x from 35x earlier, reflecting the sustained growth trajectory.

 

OLX growth not enough to drive upgrades

 

While OLX revenue is expected to rise ~15 per cent Y-o-Y in Q2FY26, JM Financial believes it still needs to exceed 17 per cent Y-o-Y growth in the second half of FY26 to meet full-year expectations. “This growth does not result in upgrades but helps us build conviction in our estimates,” the brokerage said. Despite this, the OLX segment multiple was revised to 35x from 25x earlier, factoring in the recovery.

 

Generative AI as a long-term risk

 

Analysts also flagged generative AI adoption as a potential headwind for CarTrade. Surveys indicated that tools like ChatGPT and Perplexity are starting to divert traffic from Google Search, which drives the majority of users to auto portals. 

 

“These tools aggregate data from multiple websites and provide instant vehicle comparisons, specifications, and answers, which could impact the traffic to CarTrade’s platforms over time,” the report noted.

 

CarTrade Tech is a company running a digital automotive ecosystem, connecting customers, dealers, and OEMs for buying, selling, and servicing vehicles. Its platforms include CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, and OLX India.