CarTrade Tech share price rallied over 2% in early trade on Monday, despite a weak sentiment in the broader Indian stock market. CarTrade Tech shares gained as much as 2.3% to ₹2,873.55 apiece on the BSE.

The rally in CarTrade Tech shares came after global brokerage firm UBS initiated coverage on the stock with a ‘Buy’ rating and a target price of ₹4,000 apiece, implying an upside potential of more than 42% from Friday’s closing price.

CarTrade Tech share price target valuation is based on 43x the average FY28–FY29 estimated price-to-earnings (P/E) multiple, broadly in line with the company’s long-term average valuation.

UBS noted that CarTrade Tech’s asset light model offers significant operating leverage. It expects the company’s margins to expand from 33% in FY26 to 47% by FY30, driven by significant top-line growth, with current revenue across its platforms representing only 3-4% of TAM.

“In particular, our analysis shows significant growth potential in OLX, its dominant used C2C platform. In our view, this growth potential is underappreciated. Overall, we see scope for 15-20% upside in consensus earnings for FY27–29E,” UBS said.

The brokerage firm believes the company has not yet fully monetised some of the meaningful revenue-generating streams, such as financing referral/ fees and transaction fees. It expects the company to deliver revenue CAGR of 24% over FY26-30E, above consensus forecasts.

“Importantly, we believe the market underestimates its operating leverage, building in incremental EBITDA flow-through of only 50% for FY27-28E versus our estimate of 60%,” UBS added.

CarTrade Tech Share Price Performance

CarTrade Tech share price has risen 19% in one month, and has gained 56% in three months. The stock has rallied 48% in one year, and has delivered multibagger returns of 237% in two years and 443% over the past three years.

At 10:10 AM, CarTrade Tech share price was trading 0.30% lower at ₹2,800.55 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.