CarTrade Tech , a leading digital ecosystem for automobiles in India, has reported an unprecedented surge in traffic on its CarWale and BikeWale platforms during the first day of Navratri. The company's consumer platforms experienced their highest ever single-day traffic, marking a significant milestone in the automotive digital space.

Record-Breaking Traffic Surge

The platforms witnessed a remarkable 74% increase in traffic compared to the first day of Navratri last year. This surge also represents a 60% rise over the daily average traffic recorded in August, highlighting the exceptional nature of this achievement.

Factors Driving the Surge

Several key factors have contributed to this extraordinary traffic increase:

1. Festive Season Demand: The onset of Navratri, a major festival in India, has traditionally been associated with increased consumer interest in vehicle purchases.

2. GST Rate Cut: A recent reduction in the Goods and Services Tax (GST) rates for automobiles has played a crucial role in boosting consumer sentiment. This tax cut has improved the affordability of vehicles, making it an opportune time for potential buyers to make their purchases.

3. Improved Consumer Sentiment: The combination of festive season excitement and increased affordability due to the GST cut has significantly lifted consumer sentiment in the automobile sector.

Management's Perspective

Banwari Lal Sharma, CEO of the Consumer Group at CarTrade Tech, expressed his enthusiasm about this achievement, stating, "Yesterday was a landmark day for our platforms. The festive excitement, amplified by GST-led affordability, has fueled unprecedented consumer activity. This milestone underscores the trust that millions of Indians place in CarWale and BikeWale when researching and purchasing vehicles."

Implications for the Automotive Industry

This surge in traffic on CarWale and BikeWale platforms is indicative of a potential uptick in the automotive market. It suggests that consumers are actively researching and considering vehicle purchases, which could translate into increased sales for the industry in the coming weeks.

About CarTrade Tech Limited

CarTrade Tech Limited operates leading digital platforms in the automotive space, including CarWale, BikeWale, CarTrade, Shriram Automall, and CarTrade Exchange. These platforms cater to various aspects of the automotive ecosystem, from vehicle discovery and research to buying, selling, and financing of new and used vehicles.

As the festive season progresses, it will be interesting to see how this increased consumer interest translates into actual vehicle sales and what it means for the broader automotive industry in India.

CarTrade Tech , a leading digital marketplace for automobiles in India, experienced a significant stock market setback on Wednesday, with shares falling 16% in their largest single-day drop on record. This decline came despite the company's recent report of a 25% surge in consumer traffic on its CarWale and BikeWale platforms following GST rate reductions on automobiles.

Market Reaction and Analyst Downgrade

The sharp decline in CarTrade Tech's stock price ended a three-day gaining streak and was primarily triggered by a downgrade from JM Financial. The brokerage firm lowered its rating on CarTrade Tech to 'sell' from 'hold', while simultaneously raising the price target to ₹2,350.00 from ₹1,900.00. This new target implies a 14% downside from Tuesday's closing price.

JM Financial cited concerns about the company's high EBITDA multiple of 43 times for the financial year 2027, describing it as 'too rich' for a business generating all revenue from B2B clients. The brokerage also highlighted risks associated with the cyclical nature of B2B spending and potential threats from generative AI tools affecting Google Search usage.

Stock Performance and Analyst Coverage

By the end of Wednesday's trading session, CarTrade Tech's stock had closed 12.60% lower at ₹2,391.50. This decline is particularly notable given the stock's recent performance, having surged 8x from its March 2023 low to its September 9 high.

Current analyst coverage of CarTrade Tech shows a mixed outlook:

• 4 'buy' ratings
• 1 'hold' rating
• 3 'sell' ratings

Positive Traffic Growth Amid GST Reduction

Despite the stock market setback, CarTrade Tech reported encouraging operational news. The company experienced a significant increase in consumer traffic following the government's recent GST reduction on vehicles. Its platforms, CarWale and BikeWale, saw a surge of over 25% in user visits, highlighting the immediate impact of the tax reform on consumer interest in the automotive sector.

Impact of GST Reduction on the Auto Industry

The government's decision to reduce GST on passenger vehicles, two-wheelers, and used vehicles is expected to have far-reaching effects on the automotive market. CarTrade Tech has identified three key growth drivers resulting from this policy change:

1. Increased dealer and OEM participation, leading to higher new vehicle volumes
2. Heightened festive season demand, traditionally a peak period for automobile sales
3. GST-led affordability gains, boosting transaction volumes across both new and used products

Looking Ahead

As the effects of the GST reduction continue to unfold, CarTrade Tech remains at the forefront of the digital automotive marketplace. The company's strong performance in terms of user traffic following the tax reform underscores its pivotal role in connecting consumers with dealers and manufacturers in the evolving landscape of India's automotive industry.

However, the recent stock market reaction and analyst downgrade suggest that investors and market observers are weighing the company's growth potential against valuation concerns and broader market risks. As CarTrade Tech navigates these challenges, its ability to capitalize on increased consumer interest and translate traffic growth into sustainable financial performance will be crucial for its future prospects.