Started in 2000, CarTrade Tech Limited is a multi-channel auto platform with coverage and presence across vehicle types and value-added services. Its platforms operates under several brands: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz. Through these platforms, they enable new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell their vehicles in a simple and efficient manner. Company's vision is to create an automotive digital ecosystem which connects automobile customers, OEMs, dealers, banks, insurance companies and other stakeholders. In the three months ended June 30, 2021, company's consumer platforms, CarWale, CarTrade and BikeWale collectively had an average of 27.11 million unique visitors per month, with 88.14% being organic visitors (i.e., as a result of unpaid searches). The brands, CarWale and BikeWale, ranked number one on relative online search popularity when compared to their key competitors over the period from April 2020 to March 2021 as per RedSeer Report. The average time per visit of 3 minutes and 7 seconds during the three months ended June 30, 2021 on the CarWale website. The company is technology company and believe that the company have an advanced and sophisticated technology platform. These platforms are operated by 221 technology employees as of June 30, 2021. These employees are located at three technology centers. Its teams focus on improving existing products to ensure increased customer satisfaction as well as releasing new product. company endeavour is to create technology that can be leveraged various group companies. In addition, they have a data science team that focus on utilising the vast amount of data the they capture on platforms for different purposes. The automotive industry in India is highly competitive. Company's key competitors include brands such as Cars24 (Cars24 Services Pvt Ltd), CarDekho and Bike Dekho (Girnar Software Pvt Ltd), Droom (Droom Technology Pvt Ltd) and Mahindra First Choice Wheels Limit As per financial performance, CarTrade has posted total income/net profits (loss) of Rs. 150.51 cr. / Rs. 6.60 cr. (FY18), Rs. 266.81 cr. / Rs. 25.71 cr. (FY19), Rs. 318.45 Cr. / Rs. 31.61 Cr. (FY20) and Rs. 281.52 Cr. / Rs. 101.65 Cr. (FY21). So company has posted consistent high growth. Sudden rise in profit in FY21 is due to tax credit and if we remove it than actual net profit will be around Rs 38 Cr inn FY21 and due to pandemic top-line in FY21 decreased as there was lock down in most of the Indian cities. Company has posted an average EPS of Rs. 13.63 and average RoNW of 3.52% for last three fiscals. Issue is priced at a P/BV of 4.12 as per NAV of 392.83 on 31.03.21. As per FY21 earnings, IPO is priced at P/E of around 77 and if we remove tax credit, then P/E will be around 195. So issue looks aggressively priced. As per RHP, there is no listed peers. On BRLM's front, four BRLMs are associated with this IPO, and have handled around 51 IPO in last three fiscals. From last 10 IPOs, 2 are opened below issue price and remaining are opened above issue on the day of listing. As of now, all are trading above issue price. ( As on 30.07.21) As per financials, company has shown good growth in sales, RoNW is 5.43% and P/E is around 77 as per FY21 earnings, which looks aggressively priced. In current pandemic situation, sales of company declined. This is a technology driven company with unique business model and has very huge growth potential, but competition will be very tough due to low entry barrier. Performance of BRLM is good. So, we are giving SUBSCRIBE rating to this IPO for listing gains and long term.
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