CarTrade Tech IPO subscribed 41% on day 1, should you subscribe?

The IPO of online auto classified platform CarTrade Tech was subscribed 41 per cent on Monday, the first day of subscription. According to stock exchanges, the IPO received bids for 53 lakh shares against nearly 1.3 crore shares on offer.

New Delhi: The initial public offer of online auto classified platform CarTrade Tech was subscribed 41 per cent on Monday, the first day of subscription. According to stock exchanges data, the Rs 2,998.51-crore IPO received bids for 53 lakh shares against nearly 1.3 crore shares on offer. The initial public offer is of up to 18,532,216 equity shares and is in a price range of Rs 1,585-1,618 per share.

Retail individual investors (RIIs) category was subscribed 80 per cent, while shares allocated for non-institutional investors were subscribed 3 per cent, the data showed. However, Qualified Institutional Buyers (QIBs) bought only 1 per cent of the shares allocated to them. CarTrade was founded by Vinay Sanghi, former CEO of Mahindra First Choice, and Rajan Mehra, former country head of eBay India in 2009 to enable customers to buy and sell used cars as well as new cars.

The firm is 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. It is backed by marquee investors -- Warburg Pincus, Temasek, JPMorgan, and March Capital. The three-day long IPO began on August 9 and will conclude on August 11, 2021.

Should you bid for CarTrade Tech IPO shares?

"In terms of valuations, the post-issue FY2021 PE works out 73.4x to (at the upper end of the issue price band). There are no listed peers for comparison. However, the company is doing better compared to unlisted peers in terms of financials. We believe the company has a strong brand, better technology platforms, a profitable & scalable business model,” Angel Broking said in an investor note. "Hence, we recommend a subscribe rating on the (Cartrade Tech) issue," it added.

Echoing Angel Broking’s views, ICICI Direct has said that CarTrade offers a unique play on rising digitisation of new and pre-owned vehicle transaction ecosystem. “Given the prevailing preference for digital platforms including the recent listings, we assign SUBSCRIBE rating to the issue for listing gains. Long term wealth generation at CTT will be a function of scalability, relevance and journey towards healthier return ratios,” ICICI Direct said in a note on August 4, 2021.

(Disclaimer: The data points and views provided above may not reflect the complete financial health of the company. ETV Bharat recommends its readers to do their own research before arriving at an investment decision.)