Introduction
CarTrade is all set to acquire its competitor CarDekho in a cash-and-stock deal, which has the potential to surpass $1.2 billion, generating the largest integrated digital auto marketplace in India.
The Mumbai-based auto-tech firm, CarTrade, which operates various platforms like OLX India, BikeWale and CarWale, is close to finalising an acquisition of its competitor CarDekho within a deal which is valued at around $1.2 billion.
The possible deal is said to be among the largest deals in India’s digital auto space, which is likely to be organised in the form of a cash-and-equity deal, with due diligence accomplished and final provisions under negotiation. The deal came to light since CarDekho turned unicorn. However, Amit Jain, founder of CarDekho, refused to comment on the growth, whereas CarTrade has not reacted to the queries.
When did CarDekho become a Unicorn?
In October 2021, CarDekho became a unicorn after raising around $250 million in a pre-IP funding round, which was led by LeapFrog Investments, along with Sunley House Capital and Sequoia Capital India.
The fundraising valued the Jaipur-based firm at about $1.2 billion by making it the first unicorn from Rajasthan within India.
After that, the organisation has undergone a major functional spin. The company reemphasised its focus on greater-margin businesses like insurance and auto financing.
The reason behind CarTrade's move now
- CarTrade, a publicly listed and profitable auto marketplace, had developed a robust position throughout the vehicle listings, remarketing, and vehicle listings. The organisation also owns Shriram Automall India Ltd (SAMIL) and has been extending its B2B financing businesses and enterprise remarketing over the last two years.
- CarTrade reported a 29% year-on-year upsurge in revenue to Rs. 222 cr. during September Quarter (Q2 FY26), whereas, the net profit is higher than doubled to Rs. 64 cr.
- Its EBITDA increased by 94% to Rs. 63.6 cr, which took the margins to 33% with a rise in overall costs to just 8%.
- CarTrade is determined to be debt-free with a cash reserve of approximately Rs. 1,080 cr. facilitating sufficient flexibility for acquisitions. The combined platforms of the firm, such as OLX India, BikeWale and CarWale, along with its remarketing network, attract over 85 million exceptional users every month.
Benefits of the Merger
- If accomplished, the merger would blend two of the most well-settled digital auto players of India and restructure the competition for other operators such as Droom, Spinny and Cars24, which have been aggressively expanding into financing and the user cars segment.
- The merger of the two players would enhance leadership of CarTrade into dealer auctions, B2B remarketing and vehicle financing with CarDekho’s drive into customer listing, digital and insurance retail.
- As per industry observers, the incorporation could redefine the auto-tech ecosystem of India, by allowing an end-to-end digital experience spanning vehicle search, resale, insurance and financing.
- If completed, the deal of CarTrade and CarDekho would position among the leading M&A transactions.
- This merger may develop a home-grown auto-tech powerhouse into the digital reach and fiscal influence to control the next stage of development in the mobility system.
- While CarDekho has been consolidating its fiscal footing and expanding its global presence. Moreover, Girnar Software Pvt. Ltd., its parent firm, recorded Rs. 2,644 cr. within operating income for FY25 and become productive at both the PAT and EBITDA levels during FY24.
How could the merger reshape the auto-tech sector of India?
The prospective transaction determines a broader trend in the startup ecosystem of India, where productivity and scale are driving consolidation at a rapid pace.
