CarTrade Tech Rises 9% On Robust Q4 Earnings; What Should Investors Do?

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Shares of CarTrade Tech zoomed 14 per cent in the afternoon session today after the e-retail firm logged a 50 per cent rise in net profit for the quarter ended March 2024. Profit climbed to Rs 22.5 crore in the last quarter against Rs 15 Crore profit on a YoY basis. Revenue rose 51.4 per cent to Rs 145.3 crore in Q4 against Rs 96 Cr revenue on a YoY basis.

The company’s revenue surged 51 per cent YoY to Rs 145.27 crore, largely helped by OLX’s classifieds business.

CarTrade Tech operates an automotive digital ecosystem that connects automobile customers, OEMs, dealers, banks, insurance companies and other stakeholders. The company owns and operates under several brands: CarTrade, CarWale, and AutoBiz.

Its EBITDA in Q4FY24 climbed 23 per cent year-on-year to Rs Rs 49.11 crore and EBITDA margins expanded to 18.9 per cent during the quarter under review.

What should investors do?

JM Financial, in a report dated April 24, said that the stock remains underappreciated as investors have become disenchanted having burnt fingers considering the stock performance since 2021.

“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.

Analysts at JM Financial believe that CarTrade operates in an incrementally benign competitive landscape with levers in place to sustain 20-25 per cent topline growth along with significant margin expansion potential.

The brokerage reiterated a ‘buy’ rating on the stock with a March 2025 target price of Rs 1,000, implying a 23.6 per cent potential upside from the previous close. It expects the stock to further sustain 20-25 per cent annualised compounding.

CarTrade Tech shares have a one-year beta of 0.4, indicating very low volatility. In the last one year, the stock has delivered multi bagger returns of 110 per cent.

The stock has gained 20 per cent so far this year, outperforming the benchmark Nifty 50 which has risen around 3 per cent during this period.

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