CarTrade Share Price Soars 9% Near 52-Week High After Strong Q4; Stock Up 110% in Year

CarTrade Tech share price soared more than 9%, building on the impressive gains from the previous session. Over two days, the stock experienced an 18% surge, following the company's announcement on May 6 of a 50% increase in net profit to ₹22.5 crore for the quarter ending March 2024.

As of 9:42 am IST, CarTrade Tech stock, a multi-channel auto platform, was trading up 7.4% at ₹870.80 on the National Stock Exchange (NSE). During the day, approximately 15 lakh shares of the company were traded across the BSE and NSE, a significant increase compared to the 1-month average trading volume of 4 lakh shares.

The company reported a significant 51% year-over-year increase in revenue to ₹145.27 crore, primarily driven by the classifieds business of OLX. In the corresponding quarter of the previous year, revenue stood at ₹95.86 crore. On the operating front, EBITDA for the reviewed quarter rose by 23% year-over-year to ₹49.11 crore, and the EBITDA margin widened to 18.9%.

For the full year ending March 2024, the company's net profit fell by 57.94% to ₹14.30 crore, down from ₹34.00 crore in the previous year ending March 2023. Despite the decline in net profit, the company's sales increased by 34.70% year-over-year, reaching ₹489.95 crore for the year ended March 2024, compared to ₹363.74 crore in the prior year.

CarTrade Tech shares exhibit very low volatility with a one-year beta of 0.4. Over the past year, the stock has provided multibagger returns of 110%. So far this year, the stock has appreciated by 20%, significantly outperforming the benchmark Nifty 50, which has seen a rise of around 3% during the same period.

"Financial year 2024, has been a pivotal year for our company. We have reached our highest ever quarterly revenue of ₹161 crores, representing a substantial growth," Chairman and Founder Vinay Sanghi said. "The acquisition of OLX India during this period has not only strengthened our leadership position and also paved the way for substantial synergies among OLX India, CarWale, BikeWale, and Shriram Automall," he added. He said that the company's focus remains steadfast on driving sustainable and profitable growth in the forthcoming years.

In a report from April 2024, domestic brokerage firm JM Financial noted that CarTrade's stock is undervalued, attributing this to investor skepticism over the company's performance since its 2021 metrics. The firm suggested that the investment community's limited understanding of CarTrade's business models and competitive strengths has played a significant role in the stock's under appreciation.

"Moreover, CarTrade’s business models and moats are yet to be understood by the investor community, necessitating the need to elaborate on them in greater depth," it said.

The report from JM Financial also emphasized CarTrade's advantageous position within a favorable competitive landscape and its capacity to maintain a top-line growth rate of 20-25%. Additionally, there is significant potential for margin expansion. Based on these factors, the brokerage reiterated a 'Buy' rating on the stock with a target price of ₹1,000 by March 2025, suggesting a potential upside of over 23%. The brokerage further anticipates that the stock could continue to achieve an annual growth rate of 20-25%.

CarTrade Tech manages an automotive digital ecosystem that facilitates connections between automobile customers, Original Equipment Manufacturers (OEMs), dealers, banks, insurance companies, and other related stakeholders. The company operates several well-known brands, including CarTrade, CarWale, and AutoBiz, each catering to different segments of the automotive market.