CarTrade IPO: Information analysis

Incorporated in 2000, CarTrade is a multi-channel auto platform with coverage and presence across all types of vehicles and other value-added services. The company offers a variety of solutions across the automobile value chain for marketing, buying, selling and financing new and pre-owned cars, two-wheelers, as well as pre-owned farm and construction equipment. The company operates several renowned brands, including CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto and AutoBiz. As on June 30, 2021, its consumer platforms, including CarWale, CarTrade and BikeWale, collectively had an average of 2.7 crore unique visitors per month and out of this, more than 88 per cent of visitors were without any paid searches. In addition to an increase in the average number of unique visitors, the company has also been able to increase listing on its online and offline platforms from 7 lakh in FY19 to 8.1 lakh in FY21. An increase in the number of buyers and sellers enables the company to collect more data, thereby enabling it to offer a superior customer experience. The company earns the majority of its revenues in the forms of commissions and fees from the auction and remarketing of used vehicles for retail customers, banks and other institutions. Revenues from this segment accounted for more than 57 per cent of the total revenues in FY21. Besides, the company earns 35 per cent of its revenues by providing online auto advertising, lead generation and technology services to OEMs (original equipment manufacturers). The remaining revenues come from valuation and inspection services to institutions. Strengths The company has created an automotive digital ecosystem that connects customers, OEMs, dealers, banks, insurance companies and other stakeholders. According to a RedSeer report, CarTrade was the only profitable automotive digital platform in FY20. Having a vast online presence, the company has an asset-light business model. It also operates 114 auto malls and the majority of them are on lease or rent from third parti