Avis India, a joint venture between Avis Budget Group and The Oberoi Group, has announced a ₹550 crore capital spending plan for FY27 to expand its vehicle fleet. The company aims to reach ₹700 crore in revenue, driven by rising demand for corporate leasing and premium chauffeur-driven services. This investment marks a significant jump from the ₹200 crore planned for the previous fiscal year.
Detailed Coverage
Avis India is stepping up its expansion efforts with a capital spending target of ₹550 crore for the 2026-27 fiscal year. This is a sharp increase from the ₹200 crore allocated in FY26. The company, which is a joint venture between Nasdaq-listed Avis Budget Group and EIH Ltd—the flagship firm of The Oberoi Group—is looking to strengthen its presence in India’s growing corporate mobility sector. Avis Budget Group maintains a 60% stake in the entity, while EIH Ltd holds the remaining 40%.
Fleet Growth and Business Model
Currently, Avis India manages a total of 12,000 vehicles. This fleet is split into two primary segments: 3,000 cars dedicated to rental services and 9,000 vehicles operating under long-term corporate leases. The leasing segment has seen rapid activity, growing by 45% since early 2025. By owning its assets rather than relying on local vendors, the company aims to maintain tighter control over vehicle maintenance and service standards. This approach is intended to ensure consistent service levels across its network, which currently covers 47 rental locations and leasing operations in about 70 cities.
Funding and Debt Considerations
Avis India plans to fund this expansion through a mix of internal cash generation and bank debt. Investors may note that the company carries a debt-to-equity ratio of 1.6. While this level of borrowing is common in capital-intensive asset leasing businesses, it means the company’s future financial health depends on its ability to keep fleet utilization high and manage interest costs. The company is betting on the corporate mobility market, which it estimates could grow from its current value of $2 billion to between $10 billion and $12 billion by 2031.
Challenges in EV Transition
While the company continues to add vehicles to meet client demand, it remains cautious about shifting its premium rental fleet to electric vehicles. Currently, the company notes that there is a shortage of spacious electric models that can match the utility of traditional favorites like the Toyota Innova Crysta. Additionally, uncertainty regarding the resale value of electric vehicles after their lease period ends is a factor slowing the transition. For now, the company is focusing on traditional internal combustion engine vehicles, which continue to see strong demand from its base of over 500 corporate clients. The company has also clarified that it has no plans to restart domestic self-drive rentals, citing low utilization rates in that segment.