CarTrade Tech Negotiates Acquisition of CarDekho

CarTrade Tech is engaged in discussions to acquire its competitor CarDekho, as indicated by a recent stock exchange disclosure. If realised, this merger could unify two significant players in the automotive classifieds sector and mark one of India’s most substantial startup transactions of the year.

CarTrade specified that “these discussions are confined to the automotive classifieds divisions and do not encompass their financing, insurance, or any other non-automotive operations.” The company further added that “no binding or conclusive agreement has been reached yet.”

Recent reports suggest that the estimated worth of CarDekho’s automotive classifieds division could be around $1.2 billion. Should this acquisition proceed at that valuation, it would represent a crucial achievement for the Jaipur-based firm, which has been under increasing investor pressure to launch an IPO. Since its inception nearly 15 years ago, CarDekho has made several attempts to secure an IPO since 2021 but has encountered lacklustre interest from bankers.

Meanwhile, CarTrade holds a market capitalisation of approximately Rs 15,000 crore (about $1.6 billion), adding to the intrigue surrounding the structure of this potential acquisition.

Industry Insights on the Merger

Industry experts perceive this prospective deal as a landmark consolidation within India’s internet landscape. CarTrade, with its current capitalisation nearing $1.6 billion, is in talks to acquire a competitor that is nearly equivalent in size. An analyst tracking this sector noted that “it is uncommon for a publicly listed company to acquire a privately held rival of comparable scale. If realised, it could alter the dynamics of India’s online auto marketplace.”

Strengthening Market Position

A successful acquisition would bolster CarTrade’s standing in the automotive classifieds market, which already includes OLX Auto within its portfolio. In July 2023, CarTrade successfully acquired OLX India’s automotive business for Rs 537 crore.

Although CarDekho has yet to report its FY25 figures, the company experienced a 3.5% dip in operating revenue, amounting to Rs 2,250 crore during FY24, while losses reduced to Rs 340 crore over the same timeframe.

In contrast, CarTrade appears to be gaining momentum, reporting a 109% year-on-year boost in profit after tax (PAT) for the second quarter of fiscal year 2026. The company’s PAT reached Rs 64.08 crore, alongside recording the highest quarterly revenue ever of Rs 222.14 crore, reflecting a 29% rise compared to the same quarter last year. Should this momentum continue, as management hinted during post-result calls, the interest in CarDekho becomes clear, enabling CarTrade to further establish its dominance in the sector.

Currently, CarTrade boasts a cash reserve of Rs 1,080 crore ($122 million), providing it with ample leverage to consider a combination of debt and equity for a potential acquisition.

It can be posited that given the immense optimism and momentum surrounding CarTrade, CarDekho’s valuation may not meet expectations, and reaching a deal could prove to be a challenging negotiation for CarTrade without diverting from its well-defined path forward.