The initial public offering (IPO) of CarTrade Tech, a multi-channel auto platform, has seen good demand from investors, with the issue being subscribed 56 percent on August 10, the second day of the bidding.
The IPO garnered bids for 73 lakh equity shares against the issue size of 1.29 crore shares. Retail investors continued to provide strong support the issue as their portion was fully subscribed on August 10.
Non-institutional investors have put in bids for 7 percent of their reserved portion and qualified institutional buyers 1 percent.
The owner of CarWale & BikeWale brand plans to raise Rs 2,998.5 crore through the public issue at the higher end of price band of Rs 1,585-1,618 per equity share.
Out of that, it mopped up Rs 900 crore from anchor investors on August 6.
It is a complete offer for sale by investors JP Morgan's CMDB II, Highdell Investment, Macritchie Investments, and Springfield Venture International. Among others, Bina Vinod Sanghi, Daniel Edward Neary, Shree Krishna Trust, Victor Anthony Perry III, and Vinay Vinod Sanghi will also offload shares through offer for sale.
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Cartrade Tech is a multi-channel auto platform with coverage and presence across vehicle types and value-added services.
CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz are the brands under which the business operates.
Through these platforms, the company enables new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell their vehicles.
"Considering the future prospect of the company, its scalable business model, profitable operations and business growth opportunities in the auto sector value chain and it is also placed in a sweet spot as the first-mover advantage, we recommend to 'subscribe' the issue," said Ashika Stock Broking.
In terms of the valuations, on the higher price band, the brokerage feels CarTrade demands a P/E multiple of 73.4x based on FY21 post issue fully diluted EPS and EV/sales multiple of 28.7x.
CarTrade is an electronic exchange focusing on auto sector and there is no peer company having similar business operations.
Also read: CarTrade Tech IPO opens; 10 key things to know
CarTrade has an asset-light model, operating only 114 auto-malls, a large majority of which are on lease or rent from third parties. The company has invested significantly in building technology platforms that can manage increased offerings without requiring sizable additional investments, and growing scale has resulted in a decrease in the share of fixed costs.
"Together with the strong brands, longstanding relationships with customers, dealers and other stakeholders, and an expanding suite of offerings, the company has created a profitable and scalable business model," said the brokerage.
CarTrade shares were trading at a premium of Rs 320-400 in the grey market, the IPO Watch and IPO Central Data showed. It amounts to a trading price of Rs 1,938-2,018 a share, a 20-25 percent premium over the upper end of the issue price of Rs 1,618.
The grey market is an unofficial trading platform where shares are traded before the allotment in the IPO and the market debut.
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