CarTrade Tech Shares Dip Post Strong Q2 Results as Nomura Maintains Neutral Stance

CarTrade Tech Limited's stock price saw a decline of over 3% on Wednesday, October 29, following a nearly 16% surge in the preceding session after its second-quarter results announcement. Brokerage firm Nomura has maintained a "neutral" rating on the stock, setting a target price of ₹3,021 per share, which is a marginal decrease of 2% from the previous closing price of ₹3,083.

Nomura's analysis indicates that the company's strong growth momentum remains on track. Its second-quarter Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) exceeded market expectations. The firm believes CarTrade Tech's current valuations are in the fair value zone.

Nomura has adjusted its growth projections, revising the growth forecast for the consumer segment to 33% for FY26 and 25% for FY27, and for OLX to 18% for FY26 and 25% for FY27. The brokerage noted that strong operating leverage is expected to lift margins for the consumer segment to 40-44% and for OLX to 29-33%. These positive outlooks are partly counterbalanced by a reduction in the outlook for the SAMIL business.

The company's financial performance for the second quarter showed robust growth. Revenue increased by 25.4% year-on-year to ₹193.4 crore from ₹154.2 crore. EBITDA nearly doubled to ₹63.6 crore from ₹32.6 crore in the same period last year, with margins expanding significantly to 33% from 21%. Net profit more than doubled, reaching ₹60 crore compared to ₹28 crore in the prior year.

Despite the positive results, the stock experienced a dip, trading down 3.35% at ₹3,030.1 per share in early trade. Over the past month, the stock has gained 21.2%, 74.2% in six months, and 100% year-to-date.

Impact This news suggests a mixed sentiment for CarTrade Tech investors. While the company's underlying business performance and growth are strong, the "neutral" rating and slightly reduced target price from a key brokerage might temper further upside or lead to some profit-taking after recent gains. The market will likely watch for sustained growth and execution across segments. Rating: 6/10.

Difficult Terms EBITDA: Earnings Before Interest, Tax, Depreciation, and Amortisation. This is a measure of a company's operating performance, showing profit before deducting interest expenses, taxes, depreciation, and amortisation. Basis Points: A basis point is one-hundredth of a percentage point. For example, 100 basis points equal 1%. SAMIL: SML ISUZU Limited. The text implies this is a business segment of CarTrade Tech or a related entity that Nomura has revised its outlook on. OLX: A platform for buying and selling used goods, often associated with CarTrade Tech's operations or investments. Revenue: The total income generated by the sale of goods or services related to the company's primary operations. Net Profit: The profit remaining after all expenses, including taxes and interest, have been deducted from revenue. Operating Leverage: The degree to which a company uses fixed costs in its operations. A high degree of operating leverage means a small change in revenue can lead to a large change in operating income.