Ecos India Mobility IPO review (Apply)

• IPO Details
• Docs
  • RHP
  • DRHP
• Reviews
• Subscription
• Calculator
• News
• GMP
• Allotment
• BoA
• Messages

Review By Dilip Davda on August 24, 2024

•    The company is the largest CCR and ETS service provider gaining momentum.
•    It posted remarkable performances for FY23 and FY24 indicating future prospects.
•    Listing will unlock its value and increase its visibility that augurs well for future prospects.
•    Based FY24 earnings, the issue relatively appears fully priced. 
•    Investors may park funds for medium to long term. 

ABOUT COMPANY:
Ecos (India) Mobility & Hospitality Ltd. (EIMHL) is the largest and most profitable chauffeur driven mobility provider to corporates in India, in terms of revenue from operations and profit after tax for Fiscal 2023 (Source: F&S Report). It is primarily engaged in the business of providing chauffeured car rentals ("CCR") and employee transportation services ("ETS") and have been providing these services to corporate customers, including Fortune 500 companies in India, for more than 25 years. In Fiscal 2024, it provided CCR and ETS to 42 Fortune 500 companies and 60 BSE 500 companies, among others, in India. 

The CCR segment is a B2B2C business, where its customers are corporate companies, and the end consumer is an employee, client, guest or visitor of these corporate companies. Through its ETS segment, the company offers customers with solutions to manage their employee home-office-home ground transportation. As of March 31, 2024, it had a Pan-India presence in 109 cities through its own vehicles and vendors, spread across 21 states and four union territories in India which underscores deep rooted and extensive footprint and demonstrates penetration into diverse regions across India. Its operations in 97 cities in India are conducted through vendors. 

In Fiscal 2024, it serviced the CCR and ETS requirements of more than 1,100 organizations in India. In Fiscal 2024, through CCR and ETS segments, it has completed more than 3,100,000 trips averaging at more than 8,400 trips in a day. It also addresses the global car rental requirements of corporate customers, through our global network of vendors with our capability of providing CCR services in over 30 countries. The company also provides cars of self-drive basis in the cities of Delhi, Gurugram, Mumbai and Bengaluru. It has also provided self-drive cars outside India through vendors.

It operates a fleet of more than 12,000 economy to luxury cars, mini vans and luxury coaches. The company also provides specialty vehicles such as luggage vans, limousines, vintage cars and vehicles for accessible transportation for people with disabilities. It has increased its focus on premium vehicles due to increasing customer preference for premium vehicles and the number of CCR bookings for premium vehicles in fleet has increased from 60,979 bookings, constituting 28.53% of CCR bookings in Fiscal 2022 to 168,261 bookings constituting 35.46% of bookings in Fiscal 2024. The company operates fleet of vehicles on an asset light model, where it strives to keep the number of the vehicles which it owns in its fleet significantly lower than the vehicles which are sourced from our vendors. As of March 31, 2024, for the fiscal, the company owned 750 vehicles and used 12166 vendor operated vehicles.

Its customers' benefits from its dual offerings of CCR and ETS, as these segments together provide a comprehensive solution for their corporate transportation requirements. By catering to the corporate transportation requirements of corporate customers, its two business segments create a synergy by offering corporate customers a seamless transportation experience and by providing it with an opportunity to cross-sell its services to customers in each segment. Company's CCR and ETS generates significant benefits from targeting two distinctive segments but sharing the same systems and administrative infrastructure. The company provides ETS in 10 cities in India. The number of Indian cities where it provided CCR services has grown from 89 in Fiscal 2021 to 94 in Fiscal 2024. It has the capability of offering services through vendors operating out of 109 cities in India.

The company provides its services to customers operating in a range of industries including information technology, business process outsourcing, consultancy, healthcare, e-commerce, pharmaceutical, legal and manufacturing including InterGlobe Aviation Limited (Indigo), HCL Corporation Private Limited, Safexpress Private Limited, Deloitte Consulting India Private Limited, Urbanclap Technologies Private Limited (Urban Company), IndusInd Bank Limited, Foresight Group Services Limited FZCO, HDFC Life Insurance Company Limited, Thomas Cook, India, Grant Thornton Bharat LLP, WM Global Technology Services India Private Limited (Walmart Global Tech), VRB Consumer Products Private Limited, Pinkerton Corporate Risk Management Private Limited, MedGenome Labs Limited, Dreamfolks Services Limited, Mercer Consulting(I) Private Limited, FNF India Private Limited (Fidelity), exl Service.com (India) Private Limited, Gujarat Guardian Limited and VA Tech Wabag Limited. In the financial year ended Fiscal 2024, Fiscal 2023 and Fiscal 2022 it provided ETS and CCR services to 773, 756 and 579 corporate customers, respectively.

The company operates its fleet of vehicles on an asset light model, where it strives to keep the number of the vehicles which it owns in its fleet significantly lower than the vehicles which are sourced from vendors. Asset-light business model and clear business focus are some of the key factors driving its leading returns as against some of the peers who have a broader diversified business proposition. (Source: F&S Report)

As of March 31, 2024, its CCR services are offered to customers through vendors operating out of 109 cities in India. The number of Indian cities where the company provided CCR services has grown from 89 in Fiscal 2021 to 94 in Fiscal 2024. Its offices are strategically based out of the cities of Bengaluru, Gurugram, Mumbai, Hyderabad, New Delhi, Pune, Noida, Chennai, Kolkata, Ahmedabad, Jaipur, Coimbatore, Rohtak and Lucknow. It provides ETS in 10 cities in India.

The company has a global network of vendors through whom it has the capability of providing services in over 30 countries including USA, United Kingdom, France, Italy, Spain, Sweden, Denmark, Japan, China, and Singapore through which it has the capability of providing CCR to customers in these countries. As of March 31, 2024, it had 891 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden secondary IPO of offer for sale (OFS) of 18000000 shares worth Rs. 601.20 cr. at the upper cap. The company has announced a price band of Rs. 318 - Rs. 334 per equity shares of Rs. 2 each. The issue opens for subscription on August 28, 2024, and will close on August 30, 2024. The minimum application to be made is for 44 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 30% of the post-IPO paid-up equity capital. This being an OFS, no funds are going to company. The issue is being made to unlock the listing gains and related benefits. 

The joint Book Running Lead Managers (BRLMs) to this issue are Equirus Capital Pvt. Ltd. and IIFL Securities Ltd., while Link Intime India Pvt. Ltd. is the registrar to the issue. 

The company has issued entire initial equity shares at par value so far. It has also issued bonus shares in the ratio of 199 for 1 in November 2023. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, and Rs. 26.00 per share. 

Post-IPO, its current paid-up equity capital of Rs. 12.00 cr. will remain same as this issue is a pure secondary issue. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 2004.00 cr. This IPO is for unlocking benefits of listing. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 151.55 cr. / Rs. 9.87 cr. (FY22), Rs. 425.43 cr. / Rs. 43.59 cr. (FY23), and Rs. 568.21 cr. / Rs. 62.53 cr. (FY24). 

For the last three fiscals, the company has posted an average EPS of Rs. 7.91 and an average RoNW of 39.41%. The issue is priced at a P/BV of 11.30 based on its NAV of Rs. 29.57 as of March 31, 2024. Its post IPO NAV stands same as this is an OFS.

If we attribute FY24 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 32.05. Based on FY23 earnings, the P/E stands at 45.94. Thus the issue relatively appears fully priced. 

The company reported PAT margins of 6.51% (FY22), 10.25% (FY23), 11.00% (FY24), and RoCE margins of 19.07%, 40.90%, 42.88% for the referred periods, respectively. 

DIVIDEND POLICY:
The company has paid dividend of 127.50% for FY24. It has already adopted a dividend policy in March 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Wise Travel India, and Shree OSFM E-Mobility as their listed peers. They are trading at a P/E of 28.0, and 35.4 (as of August 23, 2024). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER'S TRACK RECORD:
The two BRLMs associated with the offer have handled 56 pubic issues in the past three fiscals, out of which 18 issues closed below the offer price on the listing date. 

ECO Mobility IPO FAQs