On Tuesday, Citi has increased its price target for CARTRADE:IN, Cartrade Tech Ltd, from INR1,075.00 to INR1,232.00, while maintaining a Buy rating on the stock. This adjustment comes after the company reported a robust second quarter that surpassed Citi's expectations, particularly in its consolidated EBITDA, which saw a 20% increase compared to the firm's estimates.
The impressive performance was attributed to better-than-expected revenue and margin results in Cartrade's standalone consumer business and effective cost controls in its remarketing and OLX businesses. The standalone consumer business experienced strong organic traffic and a significant 23% year-over-year increase in revenue acceleration. Meanwhile, the remarketing business managed to increase its EBITDA by 13% year-over-year, even though revenues saw a slight 2% decline from the previous year.
Although OLX India's revenue growth was slightly below Citi's projections, with a 2% quarter-over-quarter increase compared to the anticipated 5%, the business still achieved its EBITDA targets. The analyst highlighted several positive factors, including robust consumer traffic trends showing a 20% year-over-year increase and effective cost control measures across all three verticals.
Furthermore, management's commentary on the potential for near-term monetization opportunities within OLX India contributed to the positive outlook. Based on these factors, Citi has raised its estimates, citing higher standalone consumer revenues and margins, and subsequently increased the sum-of-the-parts (SOTP) based Target Price for Cartrade Tech Ltd.
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