High-growth IPO: Exploring a company with 150 per cent CAGR in profit

The company's clients include Indigo, HCL Corporation, Deloitte Consulting India, UrbanClap Technologies, IndusInd Bank, HDFC Life Insurance Company, Thomas Cook, and others.

About the Issue  

ECOS (India) Mobility & Hospitality Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details. 

Objects of the Issue  

The company will not receive any direct proceeds from the offer. All proceeds will go to the selling shareholders, distributed in proportion to the shares each shareholder sells as part of the offer.

Promoter holding  

Rajesh Loomba, Aditya Loomba, Nidhi Seth, Rajesh Loomba Family Trust and Aditya Loomba Family Trust are the promoters of the company. The promoters and promoter group currently hold a pre-issue shareholding stake of 97.75 per cent in the company.

Company profile  

The company primarily specialises in chauffeured car rentals (CCR) and employee transportation services (ETS), catering to corporate clients, including Fortune 500 companies in India, for over 25 years. Additionally, it offers self-drive car rentals in Delhi, Gurugram, Mumbai, and Bengaluru.

According to the F&S Report, the company is the largest and most profitable chauffeur-driven mobility provider to corporates in India, based on revenue from operations and profit after tax for Fiscal 2023. In Fiscal 2024, it completed over 3,100,000 trips through its CCR and ETS segments, averaging more than 8,400 trips daily. The company operates a fleet of over 12,000 vehicles, ranging from economy cars to luxury cars, mini vans, and luxury coaches.

As of March 31, 2024, the company has a nationwide presence across 109 cities using its own vehicles and vendor partnerships, spanning 21 states and four union territories in India. It also meets global car rental needs through a network of vendors capable of providing CCR services in over 30 countries.

The company serves clients across various industries, including Indigo, HCL Corporation, Deloitte Consulting India, Urbanclap Technologies, IndusInd Bank, HDFC Life Insurance Company, Thomas Cook, and others.

Financials  

The company has demonstrated steady and strong growth over the past few years, achieving a Compound Annual Growth Rate (CAGR) of around 94 per cent in revenue and 150 per cent in net profit from FY22 to FY24. In FY24, the company achieved an impressive Return on Equity (RoE) of 43 per cent and a Return on Capital Employed (RoCE) of 42 per cent.

Valuation and outlook  

The issue is priced with a P/BV ratio of 11.30 times, calculated using its Net Asset Value (NAV) of Rs 29.57 as of March 31, 2024.

When calculating the PE ratio for the company based on FY24 earnings relative to the fully diluted paid-up equity capital, the resulting PE ratio stands at 32. Considering both valuation and returns, the company has significantly outperformed its listed peers.

Given the company's long-standing customer relationships, its extensive presence across 109 cities in India, and its robust financial performance with consistent results, we recommend that investors consider subscribing to the issue with a long-term investment perspective.