Is ECOS Mobility IPO Good or Bad - Detailed Analysis
27 August 2024
8 min read
00:00 / 00:00
ECO Mobility & Hospitality Limited is kicking off its initial public offering which will be open from August 28, 2024, to August 30, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether ECO Mobility IPO is good or bad, whether it is worth investing in ECO Mobility IPO, and so on. In this article, we will cover a few details about ECO Mobility IPO to better analyze its IPO.
ECOS Mobility IPO - Company Overview
ECOS Mobility & Hospitality Limited is the largest and most profitable chauffeur-driven mobility service provider to corporates in India, leading the market in terms of revenue and profits as of FY23. The company has been engaged in the business of offering chauffeur-driven car rentals (CCR) and employee transportation services (ETS) to corporate clients, including numerous Fortune 500 companies for more than 25 years.
Under the CCR business which functions as a B2B2C business, the company addresses the transportation needs of corporate employees, clients, guests, and visitors. On the other hand, the company offers solutions designed to manage the daily commuting requirements of employees for corporate customers under the ETS segment. As of FY24, the company has provided its CCR and ETS business to 42 Fortune 500 companies and 60 BSE 500 companies, among others, in India.
ECOS Mobility IPO- Company Operations
As of FY24, the company has established its presence in 109 cities through its own vehicles and vendors, spread across 21 states and 4 union territories in India. Out of these cities, the company conducts operations in 97 cities through its vendors.
Furthermore, the company also addresses the global car rental requirements of its corporate customers, through its global network of vendors offering CCR solutions in over 30 countries and also providing self-drive vehicles in key Indian cities.
The company operates a fleet of over 12,000 vehicles, ranging from economy to luxury cars, minivans, and luxury coaches, with an increasing emphasis on premium vehicles to meet rising customer demand for which the bookings have increased from 60,979 bookings (28.53% of CCR bookings) in FY22 to 168,261 bookings (35.46% of CCR bookings) in FY24. Furthermore, the company also provides specialty vehicles, including luggage vans, limousines, vintage cars, and vehicles for individuals with disabilities.
The company has maintained an asset-light model, where it aims to keep the number of vehicles it owns significantly lower than the vehicles that are sourced from its vendors. This helps them increase their scale of business while incurring lower capital investment.
The following table will show you the fleet of the company for the previous three financial years:
Details | March 31, 2024 | March 31, 2023 | March 31, 2022 |
Number of vehicles owned | 750 | 823 | 598 |
Fleet owned in percentage | 5.81% | 10.53% | 13.52% |
Number of vehicles operated through vendors | 12,166 | 6,991 | 3,825 |
Vendors' fleet in percentage | 94.19% | 89.47% | 86.48% |
ECOS Mobility IPO - Customer Base
ECOS Mobility & Hospitality Limited has a diverse and expansive customer base, serving clients across various industries including information technology, business process outsourcing, consultancy, healthcare, e-commerce, pharmaceutical, legal, and manufacturing.
The company counts some of the most prominent organizations among its clients, such as 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, and HDFC Life Insurance Company Limited. Other notable customers include Thomas Cook India, Walmart Global Tech, Grant Thornton Bharat LLP, and many more.
In terms of scale, ECOS Mobility & Hospitality Limited has steadily increased its corporate customer base over the years. In Fiscal 2024, the company provided Employee Transportation Services (ETS) and Corporate Car Rental (CCR) services to 773 corporate customers, up from 756 in Fiscal 2023 and 579 in Fiscal 2022.
ECOS Mobility IPO- Revenue Breakup
Segment Wise Revenue Break-up
Business Divisions | FY24 (in Rs. crores) | % of total revenue | FY23 (in Rs. crores) | % of total revenue | FY22 (in Rs. crores) | % of total revenue |
CCR | 240.02 | 43.29% | 216.37 | 51.19% | 84.53 | 57.37% |
ETS | 303.3 | 54.71% | 194.81 | 46.09% | 57.1 | 38.76% |
Total (A) | 543.32 | 98.00% | 411.18 | 97.28% | 141.64 | 96.13% |
Others (B) | 11.09 | 2.00% | 11.49 | 2.72% | 5.71 | 3.87% |
Total (A+B) | 554.41 | 100.00% | 422.67 | 100.00% | 147.34 | 100.00% |
The table shows a clear trend toward balanced revenue generation between the CCR and ETS segments, with ETS overtaking CCR in FY24. While the CCR segment had more revenue share in FY22 and FY23, the revenue share of the ETS segment has steadily increased surpassing the revenue share of the CCR segment and leading to a more equal revenue distribution between the two segments.
Geography-wise Revenue Break-up
States | Major Focused Cities | Fiscal 2024 (in Rs. crores) | Fiscal 2023 (in Rs. crores) | Fiscal 2022 (in Rs. crores) |
Karnataka | Bangalore | 110.1 | 86.32 | 21.07 |
Haryana | Gurgaon | 89.22 | 61.82 | 19.63 |
Delhi | Delhi | 33.8 | 29.74 | 11.16 |
Maharashtra | Mumbai | 62.13 | 50.49 | 29.93 |
Pune | 41.61 | 31.3 | 7.72 | |
Telangana | Hyderabad | 57.33 | 49.02 | 11.69 |
Tamil Nadu | Chennai | 43.04 | 21.57 | 4.66 |
Uttar Pradesh | Noida | 33.89 | 24.11 | 7.1 |
Gujarat | Ahmedabad | 15.9 | 8.44 | 3.08 |
West Bengal | Kolkata | 11.25 | 10.44 | 7.41 |
Rajasthan | Jaipur | 9.65 | 7.81 | 3.34 |
Other Indian States | - | 30.68 | 24.85 | 13.51 |
Total (A) | - | 538.58 | 405.92 | 140.32 |
Others (B) | - | 15.83 | 16.76 | 7.02 |
Total (A+B) | - | 554.41 | 422.67 | 147.34 |
As we can see from the table above, the company is generating a major portion of its revenue from cities like Bangalore, Gurgaon, Mumbai, and Hyderabad. But at the same time, we can see that the revenues in the majority of the cities have been increasing year-on-year.
ECOS Mobility IPO - Financial Overview
Particulars | Fiscal 2024 (in Rs. crores) | Fiscal 2023 (in Rs. crores) | Fiscal 2022 (in Rs. crores) |
Revenue from Operations | 554.41 | 422.68 | 147.34 |
EBITDA | 89.96 | 69.73 | 18.05 |
EBITDA Margin (%) | 16.23% | 16.50% | 12.25% |
Profit for the Year | 62.53 | 43.59 | 9.87 |
PAT Margin (%) | 11.00% | 10.25% | 6.51% |
Return on Capital Employed (ROCE) | 42.88% | 40.90% | 19.07% |
Return on Equity (ROE) | 42.75% | 46.70% | 14.80% |
Debt to Equity Ratio (in times) | 0.12 | 0.29 | 0.05 |
If we take a look at the financials of ECO Mobility, we can see that the company’s revenue from operations has shown a tremendous increase from Rs. 147.34 crores in FY22 to Rs. 554.41 crores in FY24. Similarly, its profits have also increased from Rs. 9.87 crores in FY22 to Rs.62.53 crores in FY24.
Furthermore, the company reported an ROE of 42.75% and an ROCE of 42.88% in FY24. This shows that the company has given good returns to shareholder’s capital and has efficiently used its overall resources. As the company operates on an asset-light model, it has a low debt on its balance sheet which is indicated by its debt-to-equity ratio of 0.12.
ECOS Mobility IPO - Industry Overview
The transition from remote work to in-office work, rise in corporate air travel, expansion of office space and expansion of tier-II and tier-III cities, and enhanced efficiency by consolidating car rental and employee transportation services with single or fewer vendors providing centralized solutions for nationwide coverage has fueled the market growth in the employee transportation service (ETS) and corporate car rental (CCR) segments in India.
As of FY23, the ETS market in India was valued at US$ 6.1 billion of which 15% of the market share was covered by the organized players in the market. Similarly, the organized players held a market share of 25% in the CCR market with the segment being valued at US$ 4.7 billion in Fiscal 2023.
In terms of revenue, the corporate car rental (CCR) market in India has grown from Rs 31,560 crores in CY 2021 to Rs 39,240 crores in CY 2023. Similarly, the employee transportation service (ETS) market has seen an increase in revenue from Rs 39,820 crores in CY 2021 to Rs 50,350 crores in CY 2023.
ECOS Mobility IPO - Peer Comparison
The table is the comparison of ECOS Mobility with the listed industry peers
Category | ECOS Mobility & Hospitality Limited (FY24) | Wise Travel India Ltd (FY24) | Shree OSFM E-Mobility Ltd (FY24) |
Face Value per Equity Share (Rs) | 2 | 10 | 10 |
EPS (Rs) - Basic | 10.42 | 12.79 | 7.02 |
NAV (per share) (Rs) | 29.57 | 89.52 | 58.64 |
RoNW (%) | 42.75% | 15.62% | 15.24% |
Total Income (in Rs. crores) | 568.20 | 414.08 | 119.05 |
From the table above, ECOS Mobility stands out with a remarkable RoNW of 42.75% and the highest total income at Rs.568.2 crores in FY24, showcasing its efficiency and strong market presence.
Although Wise Travel India Ltd has a higher EPS and NAV per share, ECOS’s impressive RoNW underscores its ability to generate substantial returns on equity. Shree OSFM E-Mobility Ltd, while maintaining respectable financials, operates on a smaller scale with lower income and return metrics, positioning ECOS as a dominant player in the industry.
ECOS Mobility IPO Details
ECO Mobility IPO Date
The IPO of ECO Mobility is open to subscription from August 28, 2024, to August 30, 2024. The shares will be allocated to investors on September 02, 2024, and the company will be listed in the NSE and BSE on September 04, 2024
ECO Mobility IPO Issue Price
ECO Mobility is offering its shares in the price band of Rs.318 to Rs.334 apiece. This means you would require an investment of Rs. 14,696 per lot (33 shares) if you are bidding for the IPO at the upper price band.
ECO Mobility IPO Size
The company is offering a total of 18,000,000 shares, amounting to Rs.601.20 Crores. Here, the entire issuance of the IPO is through an offer for sale, which means that these proceeds will entirely go to the Shareholders who are selling their shares.
ECO Mobility IPO GMP
As of 27th August 2024 at 12:28 PM, ECO Mobility traded at a premium of 45.21%. It traded at Rs. 485, giving it a premium of Rs. 151 over its higher cap of Rs 334 per share.
Is ECOS Mobility IPO a Good or Bad Investment? Final Thoughts
In conclusion, ECOS Mobility & Hospitality Limited's IPO presents a compelling investment opportunity, demonstrating significant financial growth, strong profitability, and impressive returns in FY24. The company's leading position in the corporate mobility and transportation services sector, coupled with its diverse and prestigious customer base, reinforces its market strength.
However, one must also consider the company's relationships with its vendors and customers, which are crucial for sustaining and growing the business. While the IPO is fully an offer for sale, and there is a modest debt load to consider, ECOS's asset-light model and consistent revenue growth make it an attractive option for investors
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