CarTrade’s fast lane: After doubling in a year, can this classifieds giant keep its edge?

But competition and industry headwinds loom large. Can this rally sustain?

Moat from an end-to-end ecosystem

CarTrade offers a full car sales ecosystem—from discovery and lead generation through its consumer-facing portals to monetization via dealer memberships and value-added services.

Founded in 2009, the company became a leader in auto research after acquiring CarWale and BikeWale in 2016. The purchase of Adroit Auto added large-scale inspection and valuation capabilities, cementing trusted price-discovery as a core feature.

In 2018, CarTrade took a majority stake in Shriram Automall India Ltd (SAMIL) from Shriram Finance, bringing in steady institutional fleet supply and lending. The platform now offers instant loan approvals and insurance quotes at checkout, while last-mile inspection, certification, and warranty are supported by abSure.

Even in electric vehicles, CarTrade has built an ecosystem spanning research, battery diagnostics, and cost-of-ownership comparisons. Its 2023 acquisition of OLX extended reach in auto classifieds while diversifying into non-auto verticals.

Consumer, classifieds, and remarketing fuel each other

CarWale, BikeWale, and CarTrade anchor the company’s consumer-facing research platforms. Combined with OLX’s classifieds business, CarTrade now attracts 75 million unique monthly visitors—95% organic, making the segment highly margin-accretive.

Remarketing platforms—SAMIL, CarTrade Exchange, Adroit Auto, and abSure—drove 1.3–1.4 million annualized auction listings, going by Q1FY26 numbers. Together, consumer, classifieds, and remarketing businesses reinforce one another, capturing greater consumer mindshare.

Each vertical contributed nearly ₹200 crore to FY25 revenues, which totalled ₹640 crore. While consumer and classifieds deliver higher margins, Remarketing ensures strong network effects.

OLX put CarTrade in the fast lane

The August 2023 OLX acquisition accelerated CarTrade’s leadership in the fast-growing used-car market. Paid tiers, premium listings, and verified sellers boosted monetization, while reach expanded with 40 million new monthly unique visitors. The combined entity now has 150 million annual users and 75 million monthly unique visitors.

This has deepened CarTrade’s leadership in auto-classifieds, while also widening its non-auto categories to include electronics and real estate. Since the acquisition, OLX has also shed its ancillary businesses including inventory-heavy car transactions, which had been dragging down profits. Moreover, thanks to its market-leadership, 95% of the traffic through OLX is organic.

Result? CarTrade’s revenue-growth has accelerated without a proportional increase in its cost of customer acquisition. Its revenue growth has doubled to 31%, while operating leverage has contributed to a sharp expansion of its Ebitda margin from just about 9% in FY23 to 23.5% in FY25 – the first full fiscal since the OLX acquisition.

Finally, OLX is present across more than 12 categories. This would help CarTrade diversify ad budgets across verticals, while also enabling cross-promotion and driving growth further.

Promising prospects

With growing digitization, the industry is witnessing a trend towards digital ads. This is where OLX has emerged as the market leader in used goods, particularly in used cars where it commands more than 60% market share.

Industry trends towards electric vehicles and quicker financing through FinTech should also aid growth. At the same time, the company’s physical presence through over 500 touchpoints - SAMIL yards and abSure outlets – lend it credibility for expansion in tier-2 and tier-3 cities.

Coupled with cross-selling opportunities through dealer-memberships and value-added services including insurance, finance, logistics, price-discovery, and quality certification, the company is on track to further cement its leadership. The company has also been leveraging AI to automate and enhance the efficiency of its processes, including screening, fraud detection, and customer-care. Elara Capital projects OLX’s market-share in used cars to reach 66.5% and that in general used goods to 38.8% by FY28.

With most of this achieved through organic traffic, the Ebitda margin is expected to expand by more than 7 percentage points to 30.6% over the next five years. Moreover, the business model is inventory free, thus reducing complications from working capital drags. The asset-light nature of the business and healthy internal accruals will ensure that the investments into expansion, technology, and EV adjacencies do not add much debt to the books.

Industry headwinds can play spoilsport

Auto sales have been sluggish since urban demand retreated into the backseat. This has driven up the sales of used cars, and consequently, the fortunes of CarTrade. But eventually, economic cyclicality would bring back focus on fresh sales, and the demand for used cars could moderate. The same goes for other CarTrade verticals, including electronics, and real estate.

Consumer-facing segments including classifieds, tend to be cyclical as well. Periods of high demand are typically accompanied by more visitors, and vice versa. The cyclical nature of the industry can lead to sharp variations in CarTrade’s margins. Of course, remarketing of used goods, and the company’s physical footprint can hedge against the cyclicality to an extent.

Competition has intensified as well. Players like Cars24, Spinny, and CarDekho have been vying for auto-search leadership. Of course, Google trends place OLX and CarWale significantly ahead in car-search. Similarly, BikeWale is miles ahead of BikeDekho and ZigWheels.

This is attributable to the moat created through CarTrade’s full-spectrum ecosystem and consequent network effect, that is further entrenched through OLX’s wider user-base. That said, more competition can lead to slower monetization, thus impacting growth as well as margins.

Risks and caveats

CarTrade has no promoter ownership, its shareholder base is entirely retail and institutional. While this may enhance transparency and reduce conflicts of interest, management pay will need scrutiny. Professional management could also tilt towards short-term market pressures at the expense of long-term vision and innovation.

Other risks include potential hiccups in OLX integration, weaker adoption of abSure, and slower institutional remarketing.

Brokerages peg a target price of ₹3,590—nearly 50% upside from current levels. But after the rally since last October, the stock’s valuation has jumped from 56x to 76x trailing earnings. With the stock priced for perfection, any slip in growth or margins could weigh heavily.

For more such analysis, read Profit Pulse.

Ananya Roy is the founder of Credibull Capital, a SEBI-registered investment adviser. X: @ananyaroycfa

Disclosure: The author does not hold shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.