IPO listed on 4 Sep'24
Ecos (India) Mobility & Hospitality Ltd
Minimum Investment
₹ 14,696 / 44 shares
Grey market premium
₹ 194 (58% premium)
Issue price
₹ 334
Listing price
₹ 390
Listing day %
32%
Listing on
Sept 04, 2024
Our Verdict:
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- Eco Mobility stands out as the most profitable company in the chauffeur-driven corporate mobility sector across India. Post-COVID, it has displayed impressive growth in both revenue and earnings, backed by robust return metrics.
- In terms of valuations, the IPO is reasonably priced with a price-to-earnings (P/E) ratio of 32x based on FY24 earnings, aligning with other listed peers despite having superior financials. Additionally, the grey market premium suggests a promising debut, which could be appealing to short-term investors.
- The industry is moving towards a higher adoption of organized players, anticipated to make up 30% of the market by CY25, an increase from 25% in CY23. Additionally, the expansion of corporate activities into tier-II and tier-III cities, coupled with enhanced airport connectivity, opens up new avenues for shared mobility services and potential growth for Eco Mobility.
- Given the solid demand outlook, impressive financials, expansion into premium offerings and fair valuation, investors should consider subscribing to the IPO for a medium-to-long term investment horizon.
About the company
Founded in
15 Feb'96
Managing director
Rajesh Loomba
- Eco Mobility is a leading provider in the chauffeured car rentals (CCR) and employee transportation services (ETS) sectors, boasting a varied fleet of over 12,000 vehicles, from economy cars to luxury coaches. It is recognised as India’s largest and most profitable chauffeur-driven mobility provider in terms of operating revenue and net profit for FY23.
- The firm boasts a widespread operational footprint, covering 109 cities across 21 states and 4 Union Territories in India. Its CCR segment primarily serves a B2C market, targeting corporate entities whose employees, clients, guests, or visitors use the services. Meanwhile, the ETS segment delivers extensive solutions tailored to manage the daily commuting needs of employees, facilitating transport between home and the workplace.
STRENGTHS
- Exceptional Growth: Eco Mobility has demonstrated extraordinary growth, with its operating revenue and EBITDA witnessing a compounded annual growth rate (CAGR) of 94% and 123%, respectively, from FY22 to FY24. Moreover, its net profit soared at an impressive CAGR of 152% during the same period.
- Industry-Leading Margins: Post-COVID, as offices reopened, Eco Mobility saw significant enhancements in its financial metrics. For FY24-FY25, its EBITDA margin averaged 16.4% (the highest in the industry), benefiting from its asset-light model, reduced customer acquisition costs, and efficient operational cost management.
- Asset-Light Model: Eco Mobility focuses on a capital-efficient, asset-light model, owning just 5.8% of its total fleet as of FY24, with the remainder managed through vendors. This strategy has bolstered its strong margin and return profile.
- Outstanding Return Metrics: By FY24, Eco Mobility achieved impressive return ratios, with a Return on Equity (RoE) of 42.75% and a Return on Capital Employed (RoCE) of 42.88%.
- Marquee Clientele: Eco Mobility maintains long-term relationships with reputed clients such as Indigo, Deloitte Consulting, Urban Company, IndusInd Bank, HDFC Life Insurance and Thomas Cook. These relationships not only secure a continuous revenue stream but also minimize the costs associated with acquiring new clients and expanding business with existing ones.
- Investor-Friendly Approach: In March 2024, Eco Mobility instituted a dividend policy and distributed a substantial dividend of 127.50% for FY24, underscoring its commitment to shareholder returns.
RISK FACTORS
- Client Concentration Risks: Eco Mobility's top 10 customers account for up to 35% of total revenue for each of the past three fiscal years. Losing any major customer or experiencing a reduction in business from these key clients could affect its financial performance.
- Competitive Industry Landscape: The car rental industry is intensely competitive, involving both organized and unorganized sector players.
- Legal Risks: Eco Mobility faces outstanding litigations amounting to Rs 7.8 crore, and the promoters are involved in litigations totalling Rs 2 crore. If these litigations are resolved against the company or its promoters, it could adversely impact its reputation and financial performance.
Financials
Issue details
Issue type
Mainstream
Issue size
₹ 601.20 crore
Fresh Issue
₹ -
OFS
₹ 601.20 crore
Price range
₹ 318 - 334
Lot size
44 shares
Issue Objective
This issue is purely an offer for sale (OFS), which means that the company will not receive any proceeds from the sale. Instead, all proceeds from the offer will go directly to the selling shareholders, distributed in proportion to the shares each has sold as part of the offer.
Dates
Bidding open
28 Aug'24
Bidding close
30 Aug'24
Allotment date
2 Sep'24
Refund date
3 Sep'24
Listing
4 Sep'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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