Shares of CarTrade Tech surged nearly 15 percent in early trade on July 11 after the company announced plans to buy OLX India's auto sales business in a deal worth Rs 537.43 crore.
The company will acquire a 100 percent stake in Sobek Auto India Private Ltd, the arm which operates OLX India’s auto sales segment from OLX India B.V.
Sobek Auto's turnover has consistently risen in the recent years. In FY20, the company recorded a turnover of Rs 556.42 crore, which rose to Rs 592.28 crore in FY21. The turnover jumped over 87 percent year-on-year in FY22 to Rs 1,110.40 crore.
“As part of the acquisition, Sobek has also entered into an intellectual property license agreement and a transitional support agreement for the use of certain brands and technology," CarTrade announced in an exchange filing.
At 09.16 am, shares of CarTrade Tech were trading 12.65 percent higher at Rs 549 on the National Stock Exchange.
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The acquisition is aligned to support the company's strategic objectives of pursuing investments that offer synergistic advantages to CarTrade Tech's current businesses, the firm stated in an exchange filing.
CarTrade Tech is backed by renowned investors including Warburg Pincus, Temasek, JPMorgan, and March Capital, and operates as a multi-channel auto platform. The company provides a platform for the the buying and selling of both used and new cars, as well as other value-added services.
The stock has surged around 41 percent in the past three months but is still trading at a sharp cut of around 65 percent from its issue price of Rs 1,618 from its public offer in 2021.
Brokerage firm Kotak Institutional Equities has a negative outlook for the company as the brokerage has a 'reduce' call for the stock with a price target of Rs 450. The firm attributes limited upside potential as the reason behind the cautious stance.
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