Shares of CarTrade Tech Ltd. fell nearly 10% on Tuesday, September 10, after brokerage house JM Financial downgraded the stock to ‘Sell’, citing overvaluation concerns. The multibagger stock, which has surged 196% in the past one year, dropped to ₹2,472.20 on the NSE from the previous close of ₹2,737.40.
Brokerage downgrade triggers sell-off
JM Financial set a target price of ₹2,350, implying further downside of around 14% from current levels. The brokerage noted that the recent spike in valuations, fuelled by GST benefits and OLX business updates, was “too much, too soon.”
CarTrade Tech says GST cut boosts auto demand; consumer traffic up 25%
It valued CarTrade’s businesses — New Auto, OLX, and remarketing — at 40x, 35x, and 20x September 2027E EBITDA multiples, respectively, but flagged concerns over high valuations.
AI-driven disruption a risk
The report highlighted the growing adoption of Generative AI tools like ChatGPT and Perplexity, which could disrupt the company’s primary traffic source.
“Google Search drives a majority of the traffic to portals like Carwale and Cardekho, but our consumer surveys indicate that AI tools are increasingly replacing Google for auto-related queries,” JM Financial warned, calling this a “substantial tail risk.”
Valuation concerns
CarTrade currently trades at 43x estimated FY27 EBITDA, which JM Financial termed as “too rich” for a company still heavily reliant on cyclical B2B spends. While the firm does operate B2C platforms, the brokerage said they don’t insulate revenues from the cyclical downturns of B2B spending.
It also noted that demand boosts from GST cuts in the past did not translate into a linear rise in revenues in the New Auto segment, reflecting inherent volatility.
