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CarTrade shares trade at 55% discount to issue price post Q3 results

CarTrade shares trade at 55% discount to issue price post Q3 results

CarTrade shares trade at 55% discount to issue price post Q3 results
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By Kanishka Sarkar  Jan 25, 2022 2:35:58 PM IST (Updated)

CarTrade stock has corrected almost 13 percent in the past five days and has fallen more than half the price lower to its issue price of Rs 1,618. The share price fell 6.7 percent to an intraday low of Rs 716.15 on the Bombay Stock Exchange (BSE), 55 percent below the issue price.

CarTrade Tech Ltd share price declined more than 6 percent in intraday trade on Tuesday to hit a fresh all-time low post the company's financial results for the third quarter. The company reported a net loss of Rs 23.3 crore for the quarter ended December 31, 2021, against a net profit of Rs 18.2 crore for the corresponding period a year ago. Its revenue increased 14.7 percent on a year-on-year basis to Rs 88.8 crore.

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CarTrade stock has corrected more than 10 percent in the past five days and has fallen more than half the price lower to its issue price of Rs 1,618. The share price fell 6.7 percent in intraday trade to an all-time low of Rs 716.15 on the Bombay Stock Exchange (BSE), 55 percent below the issue price.
However, CarTrade, which made its debut in August 2021, is not the only stock falling to a series of fresh lows. Such has been the case for many news age companies including the much-hyped Zomato and Paytm that have witnessed sharp correction in the past few sessions.
At 1:30 pm, the stock was trading 5.27 percent lower at Rs 727.50 on BSE and was down 5.34 percent to Rs 727.25 on the National Stock Exchange (NSE).
New-age business stocks in India are mirroring the trend on the Nasdaq, where investors have suddenly turned cautious towards highly valued tech and platform companies, anticipating huge interest rates hikes in the US.
However, at the time of the IPO rally of these new-age companies in 2021, several experts had time and again flagged concern about sky-high valuations.
According to market veteran Shankar Sharma, the profit booking that the stocks of these companies are witnessing is only normalisation of something that was extremely frothy. The froth started from the unlisted space which was really the venture capital-funded companies that permeated to the listed space through the listings that we saw in the last 6 months’ time, he said.
“Almost all of them are completely and totally devoid of any valuation merit. Their business models are commoditised, there is nothing unique about any of the companies that have got these crazy valuations. They have already fallen 20-50 percent and in my view, they can fall another 50 percent and still not be cheap,” he told CNBC-TV18 on Monday.
In fact, he said he would not be surprised if several of the new age listings are down by 90 percent from their listing prices or their IPO prices by 2022 end.
Deepak Shenoy, Founder, Capitalmind, suggested going slow for these stocks and that he would pick a larger portion when the firms’ results come and there is more commentary on them, but in general, these are going to be volatile stocks will be, he said.
“We will see them fall 60 percent, they could go up like they went up around 50-60 percent of the last year and not just the tech pack, but in general anything that's gone IPO last year, I think there is going to be a significant set of volatility, first downside and then later perhaps upside. So it makes sense if you understand the businesses to start taking positions and start thinking of taking positions but in general, I would say spread it over a period rather than all at once,” he explained.
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