Ecos (India) Mobility IPO analysis

Ecos (India) Mobility IPO will open for subscription on August 28, 2024 and close on August 30, 2024. We break down the luxury car-rental provider's strengths, weaknesses, and growth prospects to help investors make an informed decision. Ecos (India) Mobility IPO in a nutshell Quality : Its three-year average ROE and ROCE were 34.8 per cent and 34.4 per cent, respectively, during FY22-FY24. Growth : Its revenue and net profit leaped 94 and 151 per cent per annum, respectively, during FY22-FY24. Valuation : Post the IPO, the stock will be valued at a P/E and P/B of 32 and 11.3 times, respectively. Overview: Ecos (India) Mobility, a provider of chauffeured car rentals and employee transportation services for corporates, is expected to benefit from India's growing affluence. There remains ample upside for growth as premium services like chauffeured cars are gaining importance as key amenities in hotels and corporate offices for high-end clients and employees. However, the company operates in a highly competitive and fragmented sector where 85 per cent of the market is catered to by unorganised players. About Ecos (India) Mobility The company, known by the brand name ECO Mobility, is India's largest chauffeur-driven mobility provider by revenue. It operates under two segments-employee transportation services (ETS) and chauffeured car rentals (CCR). Essentially, the company offers car services with professional drivers to companies for reliable and comfortable transportation. The end-customers are the corporate customers' employees, clients, guests, and visitors. The company has a robust fleet of over 12,900 vehicles and a workforce of 8,500 skilled chauffeurs as of FY24. It operates on an asset-light model with over 90 per cent of its operating vehicles owned by different vendors. Vendors include those supplying drivers, chauffeurs, or vehicles to the company. The company's strengths Market leadership: It is the largest and most profitable chauffeur-driven mobility provider in India. The company boasts the highest operating margins in comparison to its listed peers, while having the largest fleet of over 12,900 vehicles. High-end customers: The company has a prestigious client portfolio, including 42 Fortune 500 companies and 60 BSE 500 companies. Clients with more than five years of relationship with the company account for over 50 per cent of its revenue. Ecos operates in an industry where clients are sticky and competitors would have to offer a significantly lower price for customers to consider changing service. While many unorganised players can offer much lower prices, the quality, punctuality, and safety provided by organised players like Ecos gives it an edge. The company's weaknesses Fragmented market with homogenous product: The chauffeur-driven mobility market has low-entry barriers, making it easy for new competitors to enter. Which is why 85 per cent of the market is made up of small, unorganised players. Ecos' service is not unique either. Tied with the economic cycle: The industry does well when the economy is doing well. But the sector is prone to suffer the most during rough times like a slowdown or recession, as businesses cut back on such services first when they need to save money. Ecos (India) Mobility IPO details Total IPO size (Rs cr) 601 Offer for sale (Rs cr) 601 Fresh issue (Rs cr) - Price band (Rs) 318-334 Subscription dates August 28-August 30, 2024 P