Recommendation

Used vehicle automotive industry in India is highly unorganized which claims for a strong demand of online used automotive industry in upcoming years. Rising internet and smartphones penetration is the major strength of online automotive industry. Moreover, auto finance schemes in used automobiles industry is aiming high that will push the industry further. On financials front, the direct revenues of the company have increased marginally by 2.72% in last two years. The online automotive platform generate majority of their revenues from the Commissions on generating sales of new and used vehicles from OEM (Original Equipment Manufacturer), dealers and retailers. EBITDA margins of the company stood at 25.3% in FY21 increased from 18.8% in FY20. EV/Sales of the company stood at 26 times while EV/EBITDA is 103.83x. Considering the upper price band at Rs. 1,618 and FY21 Earning Per Share (EPS) of Rs. 22.09, the company is demanding a P/E multiple of 73.24x. Flat revenues are on account of Covid-19, which may get to restoration. E-commerce platforms are asset -light models and their major expenditure is allocated to employees. These platforms generally carries higher valuations..