Shares of ECOS (India) Mobility & Hospitality kicked-off trading on the stock exchanges on a positive note, which is below the Street expectations. The shares of chauffeur driven car rental service provider listed at ₹390 on the NSE, a premium of 16.7% against the initial public offering (IPO) price of ₹334 apiece. On the BSE, the stock debuted at ₹391.30 per share.
At the time of reporting, ECOS India shares were trading 23% higher at ₹410.85, with a market capitalisation of ₹2,465 crore. It hit a high and low of ₹426 and ₹380.10 in the opening trade.
“While the listing was encouraging, investors should remain cautious due to the company's mixed financial performance. Despite top-line growth, profitability has declined, indicating potential challenges in managing costs and maximizing returns,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.
“The IPO's valuation appeared higher, based on the P/E ratio, which might have contributed to the relatively modest listing gain compared to the pre-listing hype. Additionally, the company's status as a complete offer for sale means it won't receive any new funds from the IPO, potentially limiting its ability to accelerate growth or address challenges,” she adds.
According to Nyati, ECOS Mobility's strong listing debut is a positive sign, but the mixed financial performance and elevated valuation warrant a cautious approach. “Those who want to hold it may keep a stop loss at around ₹350.”
Ahead of stock market debut, the stock was commanding a grey market premium (GMP) of ₹126 over the IPO price, indicating listing price to be around ₹460, up 37.7%. The GMP touched a peak of ₹194 on August 27 from a low of ₹52 on August 24.
The ₹601.20-crore IPO of ECOS India, which opened for subscription between August 28-30, received bids worth ₹27,010 crore, and the issue was subscribed 64.18 times. Segment wise, the issue was booked 19.66 times in the retail category, while the portion set aside for qualified institutional buyers (QIB) and non-institutional investors (NII) received 136.85 times and 71.17 times bids, respectively. The company had reserved 20% of the issue size for QIBs, 15% for NIIs, and 35% for retail investors.
The issue was completely an offer for sale of 18,000,000 shares by selling shareholders, which means the company will not receive any proceeds from the issue. The price band of the IPO was ₹318 to ₹334 per share and the minimum lot size for an application was 44 shares.
Incorporated in February 1996, ECOS (India) Mobility & Hospitality is the largest and most profitable chauffeur driven mobility provider to corporates in India, in terms of revenue from operations and profit after tax for FY2023. As of September 30, 2023, its fleet included 859 owned vehicles and 8,898 luxury cars, mini vans and luxury coaches operated via vendors.
In the six months ended September 30, 2023, fiscal 2023, fiscal 2022 and fiscal 2021, its revenue from operations was ₹2,68.5 crore, ₹4,22.6 crore, ₹1,47.3 crore, and ₹1,03.8 crore, respectively. Profit after tax for the same period was ₹30.4 crore, ₹43.5 crore, ₹9.8 crore, and ₹2.9 crore, respectively.
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