Cartrade Tech

Cartrade Tech reported its best-ever Q2 FY26, with consolidated revenue growing 29% to ₹222 crores and profits surging 109% to ₹64 crores. This performance was driven by all verticals achieving their highest-ever revenues and profits, demonstrating significant operating leverage. The company's cash balance stands at ₹1,080 crores, reflecting strong cash generation.

The Consumer Group (CarWale, BikeWale) showed robust growth, with revenue up 37% YoY and profit growing 82% in Q2 FY26. This segment achieved an impressive EBITDA margin of 40%, which management expects to continue growing, potentially reaching 55-60% in the future. The growth is attributed to increased digital ad spend allocation from manufacturers and dealers, rather than just industry sales growth.

The remarketing business recorded a 23% revenue growth and 30% profit growth in Q2 FY26, with EBITDA margins improving to 26% from 23% last year. OLX India also saw a significant turnaround, with revenue up 17% YoY and profit soaring 213%, achieving a 30% EBITDA margin with zero cost escalation. Management is optimistic about OLX's continued growth journey, aiming to surpass the 17% growth rate in coming quarters.

A key highlight was the company's ability to grow revenue significantly (29% consolidated) while keeping costs largely stable. Consolidated costs were ₹129 crores, showing only an 8% YoY increase despite the revenue surge, and were flat QoQ. Management confirmed that costs in the Consumer Group and OLX are expected to remain very stable, contributing to expanding margins across segments, with consolidated EBITDA margin reaching 33% from 21% last year.

Management detailed new monetization opportunities for OLX, including the Elite Buyer Program, which saw a small revenue benefit in Q2 FY26 and is expected to yield larger benefits in future quarters. A new trust verification program is also slated for launch by the end of Q2 FY26, which is anticipated to create additional monetization opportunities from Q3 FY26 onwards. These initiatives aim to monetize both sellers and buyers on the platform.

With a cash balance of ₹1,080 crores, management reiterated its strategy to utilize this capital for strategic M&A opportunities. If suitable M&A targets are not identified, the company intends to distribute the cash to shareholders, as its current businesses are cash-generative and do not require significant capital. Management is confident in significant ROE improvement, projecting a doubling this year and achieving 'best-in-class' levels in the next few years.

Addressing concerns about AI search modes, management clarified that while AI engines draw information from their platforms, their traffic has grown. They emphasized that for high-value purchases like cars, users still engage deeply with platforms like CarWale for detailed information, loan approvals, and dealer connections. This deep engagement ensures that AI mode still directs users to their platforms, leading to increased throughput.