The real reason behind CarTrade's steep stock drop | Why analysts have revised their target price downward

1. Latest Performance of CarTrade Stock

As of mid-September 2025 (UTC), CarTrade stock was trading on the Indian market at approximately ₹2,438, representing a decline of about 4% from the previous session. Over the past 52 weeks, the share price has seen a high of ₹2,755 and a low of ₹837, highlighting significant volatility. The company's market capitalization stands at roughly ₹1.16 trillion. Recent quarterly financials show solid year-over-year growth in both revenue and net profit—typically a positive signal for share price stability—yet shifting market sentiment has triggered sharp downward pressure.

2. JM Financial's Downgrade: Key Drivers

The immediate driver of the recent downturn was JM Financial’s downgrade. The firm lowered its rating for CarTrade from “Hold” to “Sell,” and revised its target price from ₹2,350 to ₹1,910. The downgrade was based on several factors:

• Elevated valuation: The current P/E ratio prices in an overly optimistic outlook.
• B2B revenue dependence: CarTrade’s operations in used car platforms, advertising, and transaction facilitation rely heavily on B2B clients, raising questions over revenue stability.
• Structural challenges: Advances in AI technology threaten the traditional platform model, potentially intensifying future competition.

Institutional investors now judge that the stock’s risks outweigh its potential rewards due to these concerns.

3. Target Price and Potential Risks

Market analysts are sharply divided on CarTrade’s future prospects. Bullish firms see a potential recovery above ₹2,500 within 12 months, while bearish projections go as low as ₹1,060. The consensus target price is around ₹2,124. These wide-ranging forecasts indicate significant uncertainty about the company’s profitability outlook. If CarTrade sustains profit growth and successfully develops new business lines, a rebound is possible. However, if industry competition intensifies or current valuation assumptions falter, downside risk is substantial.

4. Key Considerations for New Investors

For new investors, these factors are especially important:

• Assess whether the P/E and P/B ratios are within a reasonable range—current levels are elevated, which indicates higher risk.
• Review quarterly revenue and net profit growth; sustained performance will support share price stability.
• Monitor foreign ownership levels and the company’s debt profile—CarTrade is virtually debt-free, which strengthens its financial footing.
• Track policy developments and technology trends in the sector—particularly the disruptive potential of AI for used car platforms.

5. Outlook and Conclusion

In the near term, CarTrade’s stock faces continued downward pressure as the market absorbs the impact of the ratings downgrade. Over the medium and long term, if the company can demonstrate that its valuation is justified by broadening its business scope and improving its profitability model, a recovery to previous highs remains possible.

In summary: CarTrade is not currently a low-risk pick for new investors. If you plan to enter, consider gradual, small-scale allocations and establish clear stop-loss levels. Exercising patience and waiting for valuations to normalize may be the most prudent strategy.