The initial public offering (IPO) of ECOS (India) Mobility & Hospitality (ECO Mobility) opens for bidding today, that is, on Wednesday, August 28 and the issue can be bid until Friday, August 30. The company will be selling its shares in the fixed price band of Rs 318-334 apiece, where investors can apply for a minimum of 44 equity shares and its multiples thereafter. Incorporated in February 1996, ECOS (India) Mobility & Hospitality is a chauffeur driven car rental service provider in India.
The New Delhi-based company's primary business is to provide chauffeured car rentals and employee transportation services. It has been offering these services to corporate clients, including Fortune 500 companies in India. The Rs 601.
20 crore-IPO of ECO Mobility is entirely an offer-for-sale (OFS) of up to 1.80 crore equity shares by its promoters Rajesh Loomba and Aditya Loomba amounting to Rs 610.20 crore.
The latest grey market premium of ECOS (India) Mobility stood at Rs 195-200, suggesting gains around 60 per cent over its upper end of the price band. ECO Mobility had a presence throughout India, operating in 109 cities using its own vehicles and vendors by the end of FY24. Its presence is spread across 21 states and four union territories.
In Fiscal 2024, it served over 1,100 organizations in India. The company offers self-driven cars in Delhi, Gurugram, Mumbai, and Bengaluru. ECOS Mobility has a fleet of over 12,000 cars, including economy, luxury, and minivans, as well as specialty vehicles such as luggage vans, limousines, vintage cars, and accessible transportation for people with disabilities.
It completed over 3,100,000 trips, averaging more than 8,400 trips per day in FY24. The clientele includes names like InterGlobe Aviation, HCL Corp, Safexpress, Deloitte Consulting India, Urban Company, IndusInd Bank, Foresight Group, HDFC Life Insurance, Thomas Cook, Grant Thornton Bharat, Walmart Global Tech, VRB Consumer, Dreamfolks Services, Mercer Consulting, Fidelity, exl Service.com (India), VA Tech Wabag and more.
For the financial year ended on March 31, 2024, ECO Mobility reported a net profit of Rs 62.53 crore, with a revenue of Rs 568.21 crore.
The company's bottomline came in at Rs 43.59 crore with a revenue of Rs 425.43 crore in the financial year 2022-23.
50 per cent for the offer has been reserved for qualified institutional bidders (QIBs), while non-institutional investors will get 15 per cent of the primary offering by ECOS Mobility. Retail investors will have 35 per cent of the net offer allocated for them. Equirus Capital and IIFL Securities are the book running lead managers of the ECOS Mobility IPO, while Link Intime is the registrar for the issue.
Shares of the company shall be listed on both BSE and NSE with September 4, Wednesday as the tentative date of listing on the bourses. Here's what a host of brokerage firms said about the IPO of ECOS (India) Mobility & Hospitality: The company boasts solid margins, efficient cost control, and a strong cash position, highlighting their stability. It is the leader in chauffeur driven car services for corporate customers and is having a niche place in the B2B segment for corporate employees/customers/guests’ mobility.
After suffering during the Pandemic, it gained momentum and posted good growth FY23 & FY24, said Canara Bank Securities. "Based on FY24 earnings, the issue appears fully priced. Though this is a pure offer for sale, post listing, higher visibility and value unlocking, it will get more preference as a listed company for its business.
We recommend to 'subscribe' the IPO for long-term gains," it said. While top-line growth is evident, profitability has declined. The IPO is a complete offer for sale, meaning the company will not receive any additional funds for growth.
The IPO's P/E valuation is on the higher side, said Swastika Investmart in its IPO note. "Given the mixed financial performance and high valuation, investors should adopt a wait-and-see approach for the long term. However, the strong market demand for this IPO could lead to a positive listing," it said.
The company is strategically positioned for growth with extensive geographical presence across India. It plans to expand further into key regions, capitalizing on the development of GCCs in Tier 2 and Tier 3 cities, which are becoming vibrant trade and tech hubs due to inclusive development initiatives, infrastructure funding, MSME growth and digital penetration, said Arihant Capital. "It has a presence in 109 cities across India, and its large fleet size, combined with its operations in both ETS and CCR, positions it well to benefit from growth in these markets.
The issue is priced at a P/E of 32.05 times based on the FY24 EPS of Rs 10.4.
We recommend to subscribe for listing gains," it said. ECOS (India) Mobility & Hospitality primary business is to provide chauffeured car rentals and employee transportation services. The company is the leader in chauffeur driven car services for corporate customers and is a niche player in B2B segment for corporate employees/customers/guests’ mobility, said Anand Rathi Research.
"At the upper price band company is valuing at P/E of 32.1x with a market cap of Rs 2,004 crore post issue of equity shares and return on net worth of 42.7 per cent.
On the valuation front, we believe that the company is fairly priced. Thus, we recommend a 'subscribe' rating to the IPO, it said. Due to the asset light model, the company is able to reduce the cost and liabilities associated with the ownership of fleets.
ECOS’s strong customer and vendor relationships, established brand presence, robust financial performance, and advanced technological ecosystem position the company favorably to capitalize on industry tailwinds, said StoxBox. "On the upper price band, the issue is valued at a P/E of 32.1 times based on FY24 earnings which we feel is fairly valued.
We, thus, recommend a 'subscribe' rating to the issue from a medium to long term perspective," it said. The company has strategically positioned itself with a comprehensive geographical presence across India. Through its expansion and intensification approach, the management aims to further strengthen its footprint in key regions by identifying emerging markets and assessing the unique needs of each location, said SMIFS.
"We recommend to subscribe to the issue as a good long term investment given urbanisation and rising per capita income offering space for growth for such companies, strong clientele, expansion into new geographies within and outside India gaining traction, and an asset light model resulting in superior return ratios," he added..
