CarTrade IPO subscription to open on August 9; GMP strong ahead of issue

CarTrade Tech IPO will open for subscription on August 9. The company has fixed a price band of Rs 1,585-1,618 per share for its nearly Rs 2,999-crore IPO. The IPO subscription of CarTrade, an online auto classified platform, will conclude on August 11. 

CarTrade’s initial share sale will be entirely an offer for sale (OFS) of 18,532,216 equity shares. At the upper end of the price band, the IPO is expected to mobilise Rs 2,998.51 crore.

Cartrade claims that 32 million unique visitors came to the platform in the January-March quarter, 80 per cent of them came organically (the company did not incur any marketing costs to get them).

Apart from providing a platform for buyers and sellers of vehicles, CarTrade is also a software company that has created interconnects between stakeholders like dealers, manufacturers, and banks.

The company cited an industry report to highlight that there is a constant move towards online auto portals and the total addressable market in India was estimated at USD 14.3 billion in FY 2020. According to CarTrade, the number of engagements and transactions on the platform is also among the largest automotive data destinations in the country.

CarTrade GMP

The unlisted shares of CarTrade are commanding a strong premium in the grey. Ahead of the opening of the issue, apiece share of CarTrade is commanding a premium of Rs 610.

CarTrade expects that listing of the equity shares will enhance its visibility and brand image and provide liquidity to its shareholders, while also providing a public market for the equity shares in India.

CarTrade was founded in 2009. It is backed by marquee investors — Warburg Pincus, Temasek, JP Morgan, and March Capital. The CarTrade platform allows customers to buy and sell used cars as well as new cars. The company stated that it is a professionally managed entity and does not have an identifiable promoter (in terms of SEBI rules).

CarTrade offers a multi-channel auto platform with coverage and presence across vehicle types and value-added services through its brands — CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto and AutoBiz. Its consumer platforms – CarWale, CarTrade, and BikeWale – collectively get 3.2 crore, average unique visitors, every month (during the 3 months period ending March 31, 2021), and Shriram Automall and other auction platforms had 8,14,316 vehicles listed for auction during the financial year 2020-21.

CarTrade said that it will not directly receive any proceeds from the offer and all the proceeds will be received by the selling shareholders, in proportion to the offered shares sold by the respective selling shareholders as part of the offer. Currently, CMDB II holds 11.93 per cent stake in CarTrade43, Highdell Investment owns 34.44 per cent stake, MacRitche Investment has 26.48 per cent shareholding and Springfield Venture International holds 7.09 per cent stake in the company.

CarTrade The company generates revenues from commission and fees from auctions and remarketing services, online advertising solutions, lead generation, technology-based services to original equipment manufacturers, dealers, banks, and other financial institutions, and inspection and valuation services.

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