CarTrade IPO Opens Today. Should You Invest?

CarTrade Tech's initial public offering (IPO) opens for subscription today i.e. August 9 and closes on Wednesday, August 11. The multi-channel auto platform's IPO will be an offer-for-sale of 12,354,811 shares by marquee investors, including the likes of Warburg Pincus, Temasek and JP Morgan. CarTrade has fixed the price band at Rs 1,585-1,618 per share and is looking to raise around Rs 3,000 crore at upper limit of the price band. The shares are likely to be listed on the stock exchanges on August 23.

CarTrade has reserved 75 per cent of the primary market offering for qualified institutional buyers, 15 per cent for non-institutional investors and 10 per cent for retail bidders. It will not receive any IPO proceeds as it is an offer for sale and not a fresh issue of shares.

CarTrade was founded by Vinay Sanghi, former CEO of Mahindra First Choice, and Rajan Mehra, former country head of eBay India in 2009 to help the buyers and sellers to transact in new and used vehicles.

Axis Capital, Citigroup Global Markets India, Nomura Financial Advisory and Securities (India) and Kotak Mahindra Bank are the lead managers to the public issue of CarTrade, while Link Intime India is the registrar to the issue.

Should you invest in the Cartrade Tech IPO

Angel Broking​

"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," Angel Broking added.