The stock market can be rewarding when investments are made in the right stocks, but it can also be brutal when investments are made in the wrong stocks. Cartrade Tech was one such stock in which investors lost more than 50% of their wealth in the last one year.
CarTrade Tech operates an automotive digital ecosystem that connects automobile customers with automotive manufacturers ("OEMs"), dealers, banks, insurance companies, and other stakeholders. The company owns and operates under several brands: CarTrade, CarWale, and AutoBiz. Through these platforms, the company enables new and used automobile customers, vehicle dealerships, OEMs, and other businesses to buy and sell their vehicles simply and efficiently.
Cartrade Tech was listed on the bourses on August 20, 2021. The company had mopped up ₹2,998.51 crore through its IPO. It was a complete offer for sale. The company sets the issue price of ₹1,618. The public offer has received a healthy response from investors as it was oversubscribed by 20.29 times.
Domestic brokerages advised investors to subscribe to the company's initial public offering (IPO) last year, as it enjoyed the first mover advantage to list in the sector.
But the stock make a weak debut as it listed with a 1.11% discount to the issue price of ₹1,618, and within a month after its listing, the stock dropped to ₹1,141.45. By the end of December 2021, the stock plummeted to ₹850 levels, which is 47% lower than its issue price. By the end of February, the stock had tanked almost 70% from its issue price to ₹477.85.
|February, 22||477 (All time Low)|
|September, 28, 2022||612.90|
Investors who bought shares during the IPO have seen their wealth dwindle by 62% to date. On average, the stock eroded investors' wealth by 4.78% every month since its listing.
Retail investors are the biggest losers in the stock, owning 75% of the company, followed by foreign institutional investors, who own 19.6%, and mutual funds, who own 5.4%. There are no promoter holdings in the company. If retail investors' patience wanes, the stock will face increased selling pressure in the coming days.
In all four quarters of FY22, the company has not made a profit. It reported a net loss of ₹45.4 crore in the June quarter and a loss of ₹37.7 crore in the September quarter, with losses continuing into the final quarter of FY22.
Overall, in FY22, the company posted a net loss of ₹146.1 crore as against a net profit of ₹79.4 in the last fiscal. In FY22, the company reported total revenue of ₹157 crore as against ₹113.2 crore in FY21.
On July 30, 2022 Cartrade Tech reported its unaudited financial results. The company reported total revenue of ₹92.8 crore for Q1 FY23. Adjusted EBITDA grew by 108% Y-O-Y from ₹8.5 crore to ₹17.7 crore, resulting in a 20% Adjusted EBITDA margin for the Q1FY23, Adjusted PAT (PAT adjusted for ESOP and deferred tax) for the quarter ended June 30, 2022, stood at ₹8.6 crore. Net profit after tax for Q1FY23 came in at ₹3.3 crore, ET reported.
Cartrade Tech confirmed that it there were 31 million average monthly unique visitors for Q1FY23, of which 84.7% were organic.
Meanwhile, CarWale abSure delivers a world-class online-offline shopping experience for used car buyers and sellers. As of June 30, 2022, the company had a network of 57 CarWale abSure outlets in 34 cities.
An average of 06 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.