After purchasing Norges Bank Stake, Elara initiates a purchase on Cartrade Tech, 50% Opse Post sees 160% 1-year rally

Smallcap Multibagger Stock Cartrade Tech has entered into the good books by Brokerage Elaracapital, which has initiated a cover with a ‘buy’ rating on it, where an advantage of 50% here is estimated here. The target price is set at RS 3,590.

The share has been in the news because of a great market that runs last year, with 160%. Last week the sovereign Wealth Fund also bought 3.9 Lakh shares with a dealer size of RS 98 Crore.

Read more: Norges Bank adds Multibagger Cartrade -Tech, 2 more small caps in RS 209 Crore Waard bulk Deals

Cartrade.com is an Indian Online Auto Classifieds platform that acts as a marketplace for users who are interested in buying and selling new and used vehicles. It was mentioned in August 2021 and has a market capitalization of RS 11,895 Crore on the NSE. The consumer portals, Carwale and Bikewale, anchor discovery, qualified leads. These leads are monitored by means of pro-seller and dealer memberships, advertisements and services with added value-absure certified entries, finance, insurance, logistics. Samil (Shriram Automall) and Cartrade Exchange Add auction costs. Shares of Cartrade yielded the year-to-date return of 65%.

The brokerage has stated 5 reasons why it remains positive about the Cartrade growth. This is what it said:

1) Platform-guided auto ecosystem scales quickly: Elara believes that Cartrade is set on composite scale without setting up customer acquisition costs (CAC). It expects the monthly unique visitors (MUV) CAGR of 8.6% and sold an auction unit CAGR of 15.4% in FY25- 28th, deepened discovery and transit.2) Olx India: Acquisition of OLX India has deepened the leadership of Cartrade in Auto Classifieds, which adds India’s largest C2C audience and list density, to stimulate lead generation and to strengthen the price force. This also opened scaled non-auto categories (Electronics, Real Estate), broadening the generation of income without a step-up in customer acquisition costs (CAC). “Voor OLX India voorspellen we Gross-merchandise-waarde (GMV) CAGR van 11,9%, geleid door marktverschillende winst van +330 bps in gebruikte auto’s (van 63,2% tot 66,5% tot 63,20 38,8%), in FY25-28E, het verbreden van inkomsten door betaald zichtbaarheid, lidmaatschappen en cross-sell van financiën, verzekerings- en logistieke diensten, “zei The memorandum.

3) Model for asset light: Cartrade is a cash-rich and debt-free company because of its actival light model. It has a net cash from RS 750 Crore and the company could finance internal growth.

4) Profit forecast: Via FY25-28th, Elara expects profit after tax (PAT) CAGR of 25.4% and the company will probably generate RS 210 Crore in cumulative free cash flow, in support of continuous investments in technology, EV-Aan limits and expansion, while the capital efficiency and balance scale are retained.

5) Rating: Based on SOTP valuation and attributing 60x to consumers/advertisements and 25x in remarketing activities, one year in advance EBITDA, this brokerage arrived at a target price of RS 3.590. The shares act on 28.4x FY28E EV/EBITDA and 39.7x FY28E p/e, which means that there is enough space for re-rating guided by growth, the broker said.

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((Indemnification: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)