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Nomura initiates buy rating on CarTrade and bumps ups target price

CarTrade Tech is a player in classifieds & auction and remarketing for used vehicles and operates portals CarWale, CarTrade and BikeWale

April 29, 2022 / 11:18 AM IST
 
 
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Nomura Research initiated a buy rating on CarTrade Tech as the brokerage expects the firm to benefit from digital spending by auto original equipment manufacturers (OEMs) and dealers. It has assigned a target of Rs 770 a share, up 20 percent from current price.

CarTrade Tech is a player in classifieds & auction and remarketing for used vehicles and operates portals CarWale, CarTrade and BikeWale . The firm recently entered franchise based used car business. Nomura Research estimates classified & auction and remarketing for used cars to make up 40 and 54 percent of total revenue respectively.

"Rising digital spends by auto OEMs (14 percent share in FY20) and dealers (6-8 percent share) as majority of customers are using online to search for cars will benefit the firm. We expect auto digital spends to record 22 percent compound annual rate over FY22-25F," Nomura Research said.

The brokerage also said that growth in Shriram Automall India (SAMIL) in which CarTrade has 51 percent stake is led by rising organised share (43 percent), limited competition, tie-up with Ashok Leyland and proprietary algorithms driving higher conversions. It expects SAMIL's revenue to post 25 percent compound annual growth over FY22-25 with an EBITDA margin of 26 percent.