CarTrade Tech Limited witnessed its second day of subscription for its initial public offering (IPO) on Tuesday. The public issue saw strong demand from the investors so far. The CarTrade Tech IPO was subscribed a total of 0.99 times on day 2 of its IPO. The issue was subscribed 1.53 times by the retail category, which was the most out of all the investor segments. The qualified institutional buyers (QIBs) and the non-institutional investors (NIIs) has subscribed to the issue 0.59 times and 0.27 times respectively. The issue garnered bids for 1.28 crore equity shares against its reduced issue size of 1.29 crore shares. For the issue, the QIBs had the largest reservation at 50 per cent shares. The NIIs had a reservation of 15 per cent and the individual retail investors had an allocation of 35 per cent for the public issue.
This level of subscription from investors is an upward trend from what the CarTrade Tech IPO saw on day 1 of its public issue. The issue saw an overall subscription of 0.41 times on the first day, and it was subscribed 80 per cent by the retail category investors. The QIBs had subscribed 0.01 times, while the NIIs had subscribed 0.03 times to the public offering. At the end of the first day, the investors put in bids for 53 lakh equity shares against the issue size of 1.29 crore equity shares. CarTrade Tech had reduced its issue size from 1.85 crore shares to 1.29 crore shares after it managed to raise around Rs 900 crore from its anchor investors a day prior to the IPO opening.
The grey market premium for the CarTrade Tech on August 11 stood at Rs 320, which indicated that the shares were trading at a premium of Rs 1,905 to Rs 1,938 per equity share on the unlisted grey market.
The IPO had an issue size of Rs 2,998.51 crore and consists entirely of an offer for sale (OFS) that stands at the same value. The issue carries a price band of Rs 1,585 to Rs 1,618 per equity share with a face value of Rs 10 per equity share. It is a book-built issue IPO. The company opened the IPO for subscription on August 9 and plans to close the same on August 11.
The issue has a lot size of 9 shares on the lower end with a lot size of Rs 14,562 as the application amount. On the higher end, the lot stands with 117 shares along with an application amount of Rs 189,306. Retail investors were allowed to apply for up to 13 lots at the higher end of the lot size.
Should you Subscribe to the CarTrade Tech IPO?
Speaking on the future prospects and outlook for the company, Religare Broking said, “Going forward, the company plans to grow business by investing in technology, increasing online-offline presence and adopting a vehicle-agnostic approach. On the financial front, the company’s revenue in FY21 has seen de-growth owing to the Covid-19 impact but is expected to stabilize in the medium term. Amongst the industry players, CarTrade is the only profitable company which is a positive sign. We have a positive view on the company given its strong brands, technology-driven platforms and longstanding relationships with customers, dealers and other stakeholders.”
There are certain benefits to subscribing to the issue as it has certain competitive strengths. The company is a leading platform for Automotive Sales and has a Synergistic Ecosystem. It also has a comprehensive range of service offerings and tie-ups with various top industry brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange and AutoBiz to name a few.
Speaking on what one can expect from the issue going forward, Amarjeet Maurya, AVP, Mid-Caps of Angel Broking Ltd said, “Going ahead the company will fully subscribe mainly due to strong brand, better technology platforms, a profitable & scalable business model. Further, 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 its unlisted peers in terms of financial.”
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