CarTrade has raised approximately $390 million in a much-awaited IPO of the first-ever auto marketplace in India. Although it made a weak debut after listing at a discounted price of $21.52 (INR1,599.80).
The IPO of a pure-play auto marketplace did not live up to its billing as CarTrade ended its listing day with 7.23% drop on the National Stock Exchange (NSE). This comes days after the company was off to a sluggish start with subscriptions.
CarTrade shares were issued at $21.77 per piece, and the IPO was subscribed 20.29 times. Institutional investors made a late push by subscribing 35.45 times, but the retail investor quota was limited to 2.75 times subscriptions.
Experts had predicted a 10-15% listing day gains, taking CarTrade’s first-mover advantage and the general upbeat sentiment in the used cars ecosystem into consideration. However, a few had also noted that the issue price is exorbitantly high and that the valuation is stretched.
In its DRHP, CarTrade had claimed to be the only profitable auto marketplace in the industry, with a 9% net margin on $44 million revenue in FY20. Therefore, many shareholders continue to remain bullish over CarTrade’s long-term prospects.
Founded in 2009, CarTrade has a strong presence across the country, with a 4,000-dealers network and over four million unique monthly visitors to the site. It acquired rival CarWale in 2015 from Axel Springer for nearly $80 million. CarWale has since gone on to become a leading player in the Indian automotive space.