Cars24 expects to be eligible to file DRHP by Apr: CFO

Cars24 anticipates being eligible to file its draft red herring prospectus (DRHP) by April following its reverse flip from Singapore to India, a process that could span six to nine months, according to its CFO Shivanshu Makkar. Makkar revealed this during an interview with PTI. The company, which was originally incorporated in Singapore in 2015, has obtained approval for the reverse flip and intends to file for its IPO in India.

As a Singapore-based entity, Cars24 has been conducting business in the region since its inception. The reverse flip process mirrors that undertaken by companies like Flipkart and Myntra. Makkar informed that the reverse flip is expected to take anywhere between six to nine months to complete. Once Cars24 becomes an Indian entity, it will be eligible to file the DRHP, which would be followed by about three to four months of Sebi approvals, pricing, and book-building.

This timeline is currently Makkar's projection. In 2022, Cars24 raised a funding round valued at $3.3 billion post-money, but the company has not sought additional capital since then, as it has sufficient funds on hand. The proceeds from the last funding round were retained to support Cars24's expansion plans. Makkar stated that the primary objective of the impending IPO is to create a substantial capital pool for Cars24's further expansion into new geographies and deepen its presence in the Indian market.

He emphasized that the company is not currently burning cash and does not require immediate funding. Makkar highlighted that the Indian market presents a significant opportunity, with only 5 out of 100 Indians owning a car currently. He also mentioned that Cars24 is currently operating in 25 cities in retail and aims to expand to 200 cities, potentially selling around 50,000 cars.

This expansion would primarily require substantial capital. Regarding the valuation for the IPO, Makkar stated that there is no predetermined target at present. He clarified that an IPO is not an end goal or a primary focus for valuation purposes, but rather a means to provide liquidity to shareholders, employees, and raise funds for the company's ongoing mission.

Makkar also expressed that an IPO could offer governance benefits, as it would provide a stamp of credibility on Cars24's governance structure. Even if the company manages to secure funding through alternative methods, Makkar indicated that the governance advantages of being a listed entity could still motivate a potential IPO. Beyond India, Cars24 is exploring expansion opportunities in the Gulf region and Australia.

In the UAE, the company holds a 7% share of the used-car market and has been experiencing a growth rate of nearly 30%. In Australia, Cars24 has established a presence in three cities and is also witnessing growth.