On Friday, CarTrade IPO saw a decline in it’s share value by 2 percent to Rs 1579 from it’s original value of Rs 1618. It went further down as the trading continued further.
Why there was a drop in CarTrade share and what indications it gives for coming tech startups IPO.
Status of CarTrade IPO based on Stock Market
CarTrade IPO shares was listed at Rs 1579 in Bombay Stock Exchange(BSE) on Friday, while the issue price was Rs 1618. At 11.00 hrs, it dropped further to Rs 1550. At National Stock Exchange(NSE), it was trading at Rs 1564, 2 percent down.
Talking about the strategy for Investors, Angel Broking’s Yash Gupta Equity Research Associate said that CarTrade share is trading approximately 7.1 percent low compared with its IPO listed price. The company suggests to the investors who have CarTrade shares’ allotment to wait for sometime. It will show recovery. And, it is also advisable not to buy the fresh shares of the firm until it shows a surge in its share value. The company has shown strong financial improvements in last three financial years.
CarTrade IPO recorded a net profit growth of over 3x to Rs 101 crore in FY21 compared to Rs 31 crore in FY2020.
The automobile firm was launched in 2000. It offers multiple automotive solutions including buying, selling, marketing of new and preowned care. It is different brands including CarWale, CarTrade, BikeWale, AutoBiz and others.
Why CarTrade Share Value is Down?
When CarTrade shares saw a trend of value decline, people started comparing it with Zomato, both being the tech IPO. But, it is unfair to compare them. Zomato business model is totally different.
Food delivery IPO is a new entry in the Indian stock market, while CarTrade is about to have a big boom right off the bat.
In India, automotive industry is more traditional compared with the online space. Since investors are aware of risks and challenges associated with CarTrade IPO, its share value is currently declining.
Industry experts believe that market diversification is a major benefit for CarTrade in the long run. Multiple distribution channels for variety of vehicles, and the allied services offered by it will further boost its share value in the coming months.
For other tech startups also, it is advisable to have diversified services and products before launching the IPO.
