In recent years, urbanisation has surged with the growth of tier 2 and 3 cities in the country. It is accompanied by growing urban areas, the need for transportation services, increased living standards, etc. It leads the growth of digital and infrastructural facilities in the country.
The rise of the corporate ecosystem further underscores the need for transportation facilities. Providing this facility has become a key component of employee satisfaction. Corporate mobility has earned nearly $10.8 billion in India in FY23. Employee transportation service(ETS) and chauffeured car rental (CCR) are one of the main components of corporate mobility.
ECOS Mobility has been one of the leading companies in India, providing CCR and ETS services for more than 25 years. The company is all braced up to enter the stock market. Investors can grab this opportunity after thoroughly analysing it.
All about ECOS Mobility
Established in 1996, the company has been one of the leading market players in the space of rental taxi services to the corporate ecosystem in India. It provides chauffeur-driven car services. The company has a large network of vehicles. As of March 2024, ECOS Mobility completed on average 8400 trips per day.
The company offers services mainly in the form of CCR and ETS. The CCR service contributes 35% to the total bookings and 43% to the total revenue from operations, as of FY2024. ETS contributes 54% to the total revenue.
The company has its own offices in 14 cities, and for the rest cities, it operates with its vendor network. The company has collaborated with 5357 vendors on a monthly payment basis. However, these are third-party agreements. The company caters to companies among Fortune 500 and BSE 500 companies. The company has mainly three subsidiaries:
- Ecreate Events Pvt Ltd – The company deals mainly with event management in individual and corporate space.
- Eco Car Rental Services Pvt Ltd – It deals with renting cars for corporates.
- Consulttrans Technology Solutions Pvt Ltd – The company provides manpower support, consultancy, transportation, etc.
The company is spread across 30 other countries. It provides self-drive car facilities in Indian cities like Gurgaon, Mumbai, Bangalore, etc.
The company is focusing on building a technological infrastructure through a chauffeur mobile application, RentNet application, online booking tool, etc. It is focusing on penetration in tier II and tier III cities where new corporate ecosystems are budding.
Also, read about: Ola vs Uber vs Rapido: The battle for India’s ride-hailing market.
ECOS Mobility IPO details
The company is raising money through a full Offer-for-sale (OFS) issue. After payment of basic expenses of commission, registrar, listing fees, etc., the raised issue will be distributed among promoters releasing their shares for this OFS issue.
Equirus Capital Pvt Ltd and IIFL Securities Ltd are the book-running lead managers of this issue. Retail investors will have to invest ₹14,696 minimum for this issue.
| IPO opening date | August 28, 2024 |
| IPO closing date | August 30, 2024 |
| Price band | ₹318 – ₹334 per share |
| Lot size | 44 shares |
| Face Value | ₹2/- |
| Issue size | ₹601.2 crores |
ECOS Mobility IPO subscription status
In the start of Day 1, the IPO subscribed by 0.2 times on NSE. While on BSE, the IPO is 0.43 times subscribed, as of 10:50 A.M.
An interesting read: Understanding IPO valuation through relative and absolute methods
Key financial analysis
| Particulars (Amount in ₹ crores) | FY24 | FY23 | FY22 |
| Revenue from operations | 554.4 | 442.6 | 147.3 |
| Net profit | 62.5 | 43.5 | 9.8 |
| EBITDA* margin | 16.2% | 16.5% | 12.2% |
| Net worth | 174.4 | 115.1 | 71.5 |
| Debt to Equity ratio (D/E ratio) | 0.12 times | 0.29 times | 0.05 times |
| Return on Capital Employed (ROCE) | 42.8% | 40.9% | 19.1% |
| Return on Equity (ROE) | 42.7% | 46.7% | 14.8% |
*EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation.
- The unorganised taxi market in the country makes the industry highly competitive. The pricing structure is greatly affected by this competition. The company experienced excellent growth in FY23. The revenue and net profits massively surged nearly 200% and 309%, respectively.
- This growth is kept consistent in FY24. The revenue is up by 25% and net profit by 43%. The net profit margins are constantly in uptrend.
- The operating cash flow of the company indicates the efficiency of the company in managing day-to-day expenses. The operating cash flow growth of ECOS Mobility has been positive.
- Moreover, in FY24, the company also marked positive net cash flow, which indicates a positive aspect of cash flow management by the company.
- The capital expenditure for ECOS Mobility is majorly on its vehicles. The company already has a fleet of more than 12000 vehicles. So, the ROCE has been growing at a steady rate.
- The D/E ratio indicates better capital structure management by the company.
- Other operating ratios indicate sound positions for the company.
SWOT analysis
| Strength | Weakness | Opportunity | Threat |
| Strong presence and customer base in 109 cities in India. Rich experience of 28 years. | The company earns a large share of the revenue from ETS. However, the service is spread only in ten cities | Continuous investment in Research and development (R&D). Heavy exposure to innovative eco-friendly services in the industry. | Nearly 94% are the sourced vehicles. So, any discrepancies in it would adversely affect the business. |
| Beating the majority of the companies in the competition in terms of financials. | To facilitate infrastructure and R&D, capital expenditure and debt can potentially increase in future. | The company’s vehicle fleet consists of Electric Vehicles (EVs), which are gaining momentum in India with crucial government support. | New companies are budding in the rental car space in India. It poses a threat of intense market competition in the industry. |
| The strong operating efficiency of the company is evident in its working capital management and operating profits. | The company is building vendor networks in Tier II and Tier III cities and increasing the number of self-owned offices. |
Bottomline
ECOS Mobility is a leading chauffeur-driven car rental service in India. The company has a strong footfall in major cities in the nation. In FY23, the company achieved remarkable profitability levels, which brightens the prospects for future growth. Moreover, the strong customer base gives it an edge over its competitors.
The market is all braced up to welcome the ECOS Mobility IPO on August 28, 2024. Investors can grab this potential opportunity if it aligns with their objectives. However, before investing, investors should analyse the investment in detail.
