Recently listed stock soars 20%; jumps 78% over issue price in 10 days

Shares of ECOS (India) Mobility & Hospitality (ECOS) were locked in the 20-per cent upper circuit, at Rs 592.95, on the BSE in Tuesday's intraday trade. In the past 10 trading days, the stock of the road transport company has zoomed 78 per cent over its issue price of Rs 334 per share. ECOS made its stock market debut on September 4, 2024.

Till 01:45 PM, a combined 7.76 million equity shares, representing 12.93 per cent of the total equity of the company, had changed hands on the NSE and BSE. There were also pending buy orders for a combined 400,000 shares on both the exchanges, data shows.

ECOS offers a range of services, including chauffeured car rentals (CCR) and employee transportation solutions (ETS). The CCR segment caters to corporate clients, providing B2C services for their employees, clients, guests, or visitors. In contrast, the ETS segment focuses on helping businesses manage their employees' daily commutes, providing ground transportation solutions from home to office and back.

On-demand and pre-scheduled mobility services such as chauffeur driven car rentals, and corporate shuttle fleets will experience a surge as companies work towards maximising employee satisfaction and efficiency by providing point to-point transportation services. Employees, too, will prefer these mobility facilities as they are more reliable, convenient, and economical as opposed to public and private, self-drive transport for business purposes, ECOS said in its Red Herring Prospectus.

Amid the rapid urbanisation and the growing usage of sustainable fuels, the transition towards green mobility and intelligent transport systems will gain impetus in India. This is also seen in the recent Union Budget 2024-2025, with the Indian government continuing its thrust on infrastructural development and sustainable transport solutions.

The allocation of Rs 11 trillion towards capital expenditure in FY24-25, the provision of Rs 2.66 trillion for rural development, and an outlay of Rs 2 trillion to promote youth employment and skilling will help bolster rural income levels. This will lead to increased demand for two-wheelers and entry-level passenger vehicles in rural and peri-rural areas over the long-term, ECOS said.

ECOS, the largest and most profitable chauffeur-driven mobility provider in India, has a strong market position with operations in 109 cities. Its asset-light business model and focus on technological advancements drive profitability and operational efficiency. ECOS has demonstrated strong financial performance compared to its peers and is the industry leader in terms of revenue, indicating its dominant market position.

The company's earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of 16.3 per cent surpasses peer average of 10.7 per cent, showcasing better operational efficiency on the back of higher focus on the B2B segment which has lesser competition. Additionally, the firm's ROCE (41.2 per cent) and ROE (35.7 per cent) are significantly higher than the average of peers, reflecting superior capital efficiency, according to Nirmal Bang Securities.

ECOS' strong client relationships and high retention rate of 89.8 per cent underscores its reliability and market position. Their integrated technology, including the Online Booking Tool and RentNet Application, boosts service efficiency and client satisfaction. As the industry embraces digital solutions, ECOS is well-positioned to leverage its operational excellence and advanced technology for continued growth and leadership, said BP Equities in its IPO note.

Due to the asset light model, the company is able to reduce the cost and liabilities associated with the ownership of fleets. ECOS' strong customer and vendor relationships, established brand presence, robust financial performance, and advanced technological ecosystem position the company favorably to capitalise on industry tailwinds, the brokerage firm said.