Increased focus on premium vehicles​

• In the Chauffeured Car Rental (CCR) business, the company is enhancing its offerings by introducing premium and luxury cars. This shift is evident in the rising number of luxury vehicle bookings in the CCR segment, which have increased from 60,979 (28.5% of CCR bookings) in FY2022 to 168,261 (35.5% of CCR bookings) in FY2024. This business segment contributes positively to margins and has enabled the company to improve overall profitability.

Asset-light business model

• The company has significantly reduced its fleet and transitioned to a business model where vehicles are sourced on demand. This approach requires less capital investment in the business, resulting in higher returns on capital.​

Strong customer retention

• The company boasts a distinguished clientele that spans IT and BPO firms, as well as healthcare and pharmaceutical companies. Notable clients include Interglobe Aviation, HCL Corporation, Deloitte, HDFC Life, and Dreamfolks, among others. Revenue from customers who have been with the company for over 5 years has grown from Rs 56 crore in FY2022 to Rs 317 crore in FY2024, with their contribution to total revenue rising from 38% to 57% during the same period.

Valuations

• Based on the FY2024 financials, the company is targeting a P/E ratio of 32x and a market cap-to-sales ratio of 3.6x. The two publicly listed competitors in the industry are trading at similar valuations. The industry has experienced superior growth over the past 2-3 years post-COVID. Given the company's superior Return on Equity compared to its peers and its notably higher profit margins, we recommend subscribing to the issue.