Ecos (India) Mobility & Hospitality

Mobility service provider

Leader in chauffeur driven car services for corporate customers and is having a niche place in B2B segment

Ecos (India) Mobility & Hospitality (ECOS) provides chauffeured car rentals (CCR) and employee transportation services (ETS).The CCR segment is a B2C business. The customers are companies, and the end consumer is an employee, client, guest or visitor of these corporate companies. Through its ETS segment, ECOS offers customers solutions to manage their employee home-office-home ground transportation.

ECOS has a pan-India presence in 109 cities. Vehicles and vendors are spread across 21 states and four Union Territories in India. Operations in 97 cities are through vendors.

ECOS in FY 2024 serviced the CCR and ETS requirements of more than 1,100 organizations in India, including 42 Fortune 500 companies and 60 BSE 500 companies. Itcompleted more than 3,100,000 trips, averaging over 8,400 trips in a day.

ECOS addresses the global car rental requirements of corporate customers through theglobal network of vendors providing CCR services in over 30 countries. Cars are provided on a self-drive basis in Delhi, Gurugram, Mumbai and Bengaluru. Self-drive cars are provided outside India through vendors.

Object of the offer

The OFS by the selling shareholders comprises up to 99,00,000 shares by Rajesh Loomba and up to 81,00,000 shares by Aditya Loomba.

The post-issue promoter shareholding will reduce to 67.75% from 97.75%

Proceeds from the offer will be received by the selling shareholders in proportion to the offered shares.

Strengths

One of the largest CCR and ETS service providers. Operates a fleet of more than 12,000 economy-to-luxury cars, mini vans and luxury coaches. Specialty vehicles include luggage vans, limousines, vintage cars and vehicles for accessible transportation of people with disabilities.

Long-term relationships with customers across industries. Customers operate in a range of industries including information technology, business process outsourcing, global capability centers, consultancy, healthcare, e-commerce, pharmaceutical, legal and manufacturing. CCR and ETS create a synergy by offering a seamless corporate transportation experience and cross-sell services to customers in each segment.

Has a pan India presence. CCR services are offered in 109 cities across India and ETS services in 10 cities. 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. Further, there are plans to diversify presence to Tier-II and Tier-III cities and increase penetration in cities with existing operations.

Established a brand presence in India, built through operational excellence. The vehicles are equipped with best-in-class amenities and are driven by professionally trained and verified chauffeurs. Online marketing is through LinkedIn, Instagram, Facebook, YouTube and targeted emails, targeted search engine optimization (SEO) and pay per click (PPC).

The focus on proprietary technology has enabled better management of the service offerings and improving operating efficiencies by integrating the service functions and ensuring accuracy, reliability and swiftness in operations.

Operates the fleet of vehicles on an asset-light model. The number of owned vehicles is significantly lower than vehicles sourced from vendors.

Weaknesses

Measured against high quality service standards and governed by the terms and conditions of the contracts with customers. Any failure to comply with these standards may lead to the cancellation of existing and future bookings.

The business depends on its relationships with vendors supplying vehicles and chauffeurs. Any adverse changes in such relationships or the inability to enter new relationships will have an adverse impact.

Customer concentration risk exists, with the top 10 customers contributing 34.6%, 35.7% and 32.8% of the total revenue in FY2022, FY2023 and FY2024, respectively.

Downturn in global capability centers (GCC) is a potential risk.

Incurs significant expenditure towards vendor and vehicle operation expenses. Any increase in such expenses can affect the margins and reduce profitability.

The car rental industry is highly competitive, with competition from both the organized and unorganized players.

There are outstanding litigation‘s of Rs 7.8 crore against the company and Rs 2 crore against the promoters.

Heavily dependent on a few major cities for business. Any loss of business from any such major cities may have a material impact on the operations.

Valuation

Sales were up by 31.2% to Rs 554.41 crore in FY 2024.The OPM decreased by 27 bps, leading to an increase in OP by 29% to Rs 89.96 crore. OI spurted401.1% to Rs 13.79 crore. Interest costs rose 22.1% to Rs 2.73 crore. Depreciation jumped56.5% to Rs 18.71 crore. PBTstood at Rs 82.32 crore as against Rs 58.29 crore in FY2023. Net profit stood at Rs 62.53 crore as against net profit of Rs 43.59crore.

At the higher price band of Rs 334, the offer is made at a P/E of 32 times FY2024 EPS (EPS of Rs 10.4).

Listed industry peers are Wise Travel India, Shree OSFM E Mobility and International Travel House. In comparison, Wise Travel India trades at 28 times its P/ FY2024 EPS(EPS Rs 9.8), Shree OSFM E- Mobility at 35.3 times its P/FY2024 EPS(Rs 5.7) and International Travel House at 23.1 times its P/TTM EPS(Rs 29.3) .