CarDekho bets on lending, insurance biz ahead of IPO

“I link it (the IPO) to profitability. So, when we are going out, we want to be a profitable company. My intent is to make sure that the company is public at a price, which is sustainable," he said.

CarDekho expects to post Ebitda (earnings before interest, taxes, depreciation, and amortization)-level profitability by the third quarter of FY24. By then, “we are hoping for green shoots at a group level," Jain said.

Founded in 2008 by siblings Amit and Anurag Jain, CarDekho ventured into the pre-owned car retail market under the ‘Gaadi’ brand name in 2019, and later launched lending platforms and other verticals. Most of the individual businesses are already profitable, while it expects to add investments in others to make them grow faster, Jain said.

“There are certain businesses in investment mode, and certain cash-generating modes. A healthy mix of two has to exist if we want to grow over the next decade at 40-50% annually," said Jain.

CarDekho also ventured into overseas markets such as Indonesia and expects an annual revenue rate of up to $26 million from Southeast Asia. “That market size is large because the average car value is higher, and the loan attachment rate is higher. This makes it a lucrative market," he said.

However, the Sequoia Capital-backed firm, closed many retail stores in India since last year due to thin margins in the used marketplace business.

“Globally, most of the used car marketplace models have collapsed. We also evaluated our own models on where it’s going to generate a profit pool. So, we’re now pursuing auction business where we buy cars from customers and auction them to the dealers," Jain said.

CarDekho last raised $250 million as part of its latest Series E round at a valuation of about $1.2 billion in October 2021. The round turned the company into an unicorn.

The startup counts LeapFrog Investments, Mirae Asset Group, Hillhouse Capital, CapitalG and Ping An Global Voyager Fund as its investors.

In FY21, the company posted revenue from operations of ₹884.3 crore while net loss widened to ₹342.8 crore from ₹326.4 crore a year before. The company is yet to file its financials with the Registrar of Companies.

Meanwhile, CarDekho is witnessing stellar growth of its lending platform Rupyy, which enables buyers to secure loans for used car purchases through tie-ups with 26 banks and non-banking financial companies (NBFCs), including the group’s own NBFC Girnar Capital.

“Car financing platform Rupyy is disbursing around ₹ 600 crore a month and we’ve now captured almost 14% market share of the used car lending segment," said Jain.

The company recently also started providing loans for buying electric vehicles via Rupyy Green. It is also expecting its new car discovery platform to drive further growth. “From a growth perspective, these new business additions will enable the group’s growth for the upcoming three-four years. The new auto arm’s Ebitda margin is close to 30%," he said.

Another vertical on which Jain is bullish is InsuranceDekho, which is operated by Girnar Insurance Brokers Pvt. Ltd, and was launched in 2019. “The insurance business is near breakeven and is expected to double this year. The premium of insurances will stand at more than ₹180 crore, with health and life making up for about 22% of the business," Jain said.

In the last fiscal, InsuranceDekho posted ₹47.9 crore as revenue from operations, up from ₹9.7 crore in FY21. Net loss ballooned to ₹72.3 crore in FY22 from ₹46.4 crore loss in the year before.