Financially Strong Stock to Buy Now for 73% Upside; Recommended by Nomura

Synopsis: This multi-channel auto platform provideris leveraging AI across CarWale and OLX, backed by 85 million+ monthly users and ~63 percent  market share, to drive 24–25 percent  revenue CAGR and improve margins through stronger monetisation.

The shares of this small cap company majorly engaged in connecting new and used automobile customers, vehicle dealers, vehicle OEMs, and other businesses to buy and sell different types of vehicles, were in focus after brokerage sets target at price of Rs. 3026

With the market capitalization of Rs. 8403 Crores, the shares of Cartrade tech Ltd were trading at around Rs. 1755  which is 46 percent discount from its 52 weeks high of Rs. 3291 per share and is trading at a P/E of 41 whereas industry P/E stands at 39.9 

Nomura has maintained a “Buy” rating on CarTrade Tech with a target price of Rs. 3,026, compared with the closing price of Rs. 1755, implying an upside of nearly 73 percent, supported by strong AI-led monetisation initiatives. Let’s now look at the key rationale and growth drivers behind this bullish view.

Brokerage View

Nomura maintains a positive view on CarTrade Tech, supported by its 85 million+ monthly unique visitors and ~63% market share in used car listings. The brokerage believes AI-led initiatives across CarWale and OLX could drive stronger monetisation, with the business expected to deliver healthy revenue growth and margin expansion over FY26–FY28E through better scale and operating leverage.

AI Initiatives Across Platforms

CarTrade Tech is increasingly focusing on the adoption of Artificial Intelligence on its platform to improve the user experience and create new revenue growth opportunities. With its strong user base of 85 million+ monthly unique visitors and ~63 percent  market share in the used car listings segment in India, the company is using its scale to further consolidate its competitive advantage. As the management stated, the company is looking to leverage Artificial Intelligence in the new car, used car (including OLX), and the remarketing space to improve user experience, drive conversion rates, and create new revenue streams.

New Car Segment (Consumer Group)

As part of their new car segment, CarTrade is planning to launch “Signature Dealer” from next year, which is a digitalisation initiative of the entire car-buying process. This is achieved by AI-powered agents connecting dealers and OEM systems through APIs, allowing users to access inventory, pricing information, discounts, financing options, and test drive bookings without any intervention from dealerships. The firm is of the opinion that despite various AI-driven search engines available in the market, car buying is a high-involvement decision for users, and CarWale will continue to offer a high value proposition for users.

Used Car and OLX Segment

In the used cars segment, including OLX, CarTrade is currently focusing on B2C transactions but is also foraying into new areas. The company is planning to launch a unified C2B product named “Super Buyer – AI,” through which users can sell their used cars by simply uploading an image. The users will then be connected with buyers instantly through the hyperlocal approach. Furthermore, the company is also planning to launch the C2C AI interface in the upcoming quarter or 1QFY27E, which will further enhance the transactional experience. In the case of OLX, the company is also seeing high user stickiness on the platform, with over 57 percent  of the users being active for more than 5 years on the platform. The programs such as “Elite Buyer” and “Elite Seller” are also gaining traction, and the AI versions are also expected to enhance the monetisation potential.

Remarketing Segment

The company is concentrating on enhancing its offerings through financial and technological upgrades in the remarketing business. For example, CarTrade is looking to introduce inventory financing in association with banks, in addition to leveraging its data capabilities to facilitate cross-geography transactions. This will help in improving liquidity in vehicle auctions. 

Financial Outlook and Growth Metrics

From a financial perspective, CarTrade Tech is expected to grow strongly with these initiatives. The consumer business is expected to grow at ~24 percent  revenue CAGR over the period of FY26 to FY28E, while the OLX business is expected to grow at ~25 percent  CAGR with the launch of multiple products and initiatives. Operating leverage is also expected to improve with the expansion in EBITDA margins from 35.4 percent  in FY26E to 39.4 percent  in FY28E.

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