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Revenue increases by 10.5% QoQ while profits shows a strong growth of 30.8% on QoQ basis | CarTrade Q2 FY23 Result & Earning Call Highlights

Revenue increases by 10.5% QoQ while profits shows a strong growth of 30.8% on QoQ basis | CarTrade Q2 FY23 Result & Earning Call Highlights

Published on 26 October 2022 .Views 17 .Comments 0
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Financial Results
  • The standalone business of CarTrade Tech houses its consumer group business which are websites (CarWale, CarTrade and BikeWale).
  • The standalone revenue from operations for the company increased by 40.4% YoY to Rs. 54.9 crores and also showed a QoQ growth of 30.7%.
  • EBITDA for the company was negative at Rs. 2.3 crores. The negative EBITDA narrowed down this quarter.
  • The company has incurred an ESOP cost of Rs. 7.96 crores during Q2FY23 on a standalone basis.
  • The company registered a profit of Rs. 7.5 crores
  • The consolidated business of the CarTrade Tech business consists of the Standalone consumer group businesses like Carwale, Bikewale and CarTrade.com. The business also contains other operations such as abSure, One-Click Purchase and Auto Finance.
  • There is also the remarketing business which comes under the consolidated umbrella. These businesses are Shriram Automall, CarTrade exchange and Android Auto.
  • The consolidated business revenue stood at Rs. 102.5 crores, registering a YoY growth of 16.3% and QoQ growth of 10.5%.
  • The company reported an EBITDA of Rs. 8.2 crores for Q2FY23.
  • The company reported a profit of Rs. 3.4 crores for this quarter.
  • The ESOP costs for this quarter were Rs. 7.26 crores.

Business Highlights
  • As per the company’s presentation, it is India's number 1 car and two-wheeler auto portal.
  • Automalls and abSure outlets have reached 180+ physical locations.
  • Average monthly unique visitors in Q2FY23 stood at 3.7 crores. Organic unique visitors for the company stood at 86.61% in the quarter.
  • Costs have mostly remained flat on a QoQ basis resulting in higher growth in EBITDA.
  • Number of vehicles for auction stood at 3,04,865 units, a flattish YoY growth of 1% and QoQ growth of 12%.
  • The number of vehicles sold through the auction stood at 63,989 units, a QoQ growth of 11% and YoY growth of 0.72%.

Earnings call Highlights
  • The company is debt free and has an investment surplus of over Rs. 1,000 crores.
  • The new car business in the first six months has grown by 31% and the used car business has grown by 160% YoY for the first six months.
  • The advertising by car manufacturers (OEM dealer business) has grown by 33%. Dealer business has grown by 59%. In the consumer segment, the breakup of dealer and OEM business currently stands at 40:60. The gap is narrowing and the dealer business is growing faster than the OEM business.
  • Shriram Automall has had a tough quarter due to one segment (auction of the repossessed vehicle) that has remained flat in the past quarter.
  • Financing volume in the auto industry is growing, and repossession is going down as the portfolio is slightly better and the resale value is higher which is normally rare. This is a short-term cyclical issue and not a long-term structural issue.
  • Supply chains have gotten better, and volume numbers have become better. With the supply chain and volumes improving, it is favourable for the business. Passenger vehicle estimates at 25-28% growth in FY23.
  • Absure at 62 locations now, target to be 100 by the end of the year. The focus has mostly shifted from reaching new locations to improving operating efficiency, rollouts and customer experiences. It is a franchisee, asset-light model.
  • The new vehicle growth stood at 19% YoY for Q2FY23 and used cars grew by 160% on a YoY basis in Q2FY23.
  • Growth in retail is 51% in Q2 which is 31% of the business. Repossession has been flat which is brought the growth rate down. In Q2 the market shares have not been changed.
  • Intent of the management is to look at investments and acquisitions in their eco-system which can provide value-added services. If the management does not find the businesses, they might think of distributing part of the surplus to shareholders.
  • While the company sits on comfortable cash, competitors are seeing a cash crunch. The company has always focused on profitable growth.
  • The company did not raise any cash during IPOs, the investment surplus has come from equity raises in the past and the cash generated from profits.
  • Not necessary that traffic increase has a correlation with revenue growth. Revenue growth comes from manufacturers and dealers paying for digital advertising.
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Yadnya Academy Pvt. Ltd. (InvestYadnya) is registered with SEBI under SEBI (Research Analyst) Regulations, 2014 with registration no. INH000008349.

Disclosure with regard to ownership and material conflicts of interest:

1. Neither Research Analyst nor the entity nor his associates or relatives has any financial interest in the subject Company;

2. Neither Research Analyst nor the entity nor its associates or relatives has actual /beneficial ownership of one per cent or more securities of the Subject Company, at the end of the month immediately preceding the date of publication of the research report or date of public appearance;

3. Neither Research Analyst nor the entity nor its associates or his relatives has any other material conflict of interest at the time of publication of the research report or at the time of public appearance.

Disclosure with regard to receipt of Compensation:

1. The Research Entity and its associates have not received compensation from the subject company in the past twelve months.

2. The subject company is not or was not a client during the twelve months preceding the date of recommendation.
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