Ethos Limited Celebrates One-Year Milestone Since IPO Launch

Company Overview:  

Ethos Limited is India’s largest luxury and premium watch retail player having a market share of approx. 20% in the luxury watch retail segment and approx. 13% in the premium and luxury watch retail segment in India. It was incorporated on November 5, 2007, and promoted by KDDL Ltd. Currently, it has 56 physical retail stores spread across 22 cities in India. Ethos offers customers an exceptional Omni-channel experience through its website and social media platforms.  

Their website is India’s largest online platform for premium and luxury watches, boasting an extensive collection of brands and models. Ethos boasts an impressive portfolio of over 60 premium and luxury watch brands, including renowned names like Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Bvlgari, H. Moser & Cie, Rado, Longines, Baume & Mercier, Oris, Corum, Carl F. Bucherer, Tissot, Raymond Weil, Louis Moinet, and Longines, etc.  

Ethos is also actively involved in the retail of pre-owned luxury watches through its dedicated “certified pre-owned” (CPO) luxury watch lounge situated in New Delhi.  

Industry Overview  

India’s watch market is likely to grow at 10.6% CAGR to reach Rs 22,300 crore by 2025. On the other hand, premium and luxury segments are growing faster than other segments at a CAGR of 12.5%, driven by faster urbanization, aspirational lifestyles and growing disposable incomes, and robust rise of e-commerce on the back of faster penetration of the internet.  

IPO Flashback  

The IPO of Ethos Ltd opened on May 18, 2022, and closed on May 20, 2022, at a price band of Rs 836 to Rs 878 per share having a lot size of 17 shares. The IPO was subscribed only 1.04 times. The company made a debut on May 30, 2022, in both NSE and BSE, and the final price was Rs 878. Today the stock is closed at Rs 1250. It has given a return of 42% to its investors. 

Stock Performance  

Today the stock opened at Rs 1249.90, Rs 23 up from the previous day’s closing, and finally closed at Rs 1250.40 on BSE. Its 52-week high and 52-week low is Rs 1474.95 and Rs 711.60 respectively. The stock has given a CAGR return of 52% in the last year. The Market Cap of the company is Rs 2920 Crore. Stock is trading only 15% below its all-time high. The stock was in long consolidation for seven to eight months and gave a breakout in April. The stock has shown a profit booking in May from its all-time high.  

Financial Performance  

During Q4 FY23, the company’s revenue was up by 30.80% YoY from Rs 159 crore to Rs 208 crore and reported an operating profit of Rs 25 crore from Rs 20 crore with an operating profit margin of 12%. Company’s Net Profit also increased from Rs 8 Crore to Rs 13 crore.  

In FY23 Company reported its revenue up by 36.6% from Rs 577 crore to Rs 789 crore with a three-digit operating profit of Rs 113 crore for the first time and achieved an operating margin of 14%, net Profit was Rs 60 crore compared to last year Rs 23 crore. Its compounded profit growth is 72% and 962% in 5 and 3 years. The operating margin has grown significantly from 4% to 14% in the last five years from 2018 to 2023. ROCE and ROE are at 16.4% and 13.9% respectively. Promoter holding is 64.67% whereas FIIs and DIIs hold 7.34% and 9.75%, respectively.   

The rise in the number of HNIs in fast-growing economies, such as China and India has led to an increase in the wealth of people and the demand for luxury products is directly proportional to the number of HNIs. According to the report, the share of Luxury watches has grown from 48% to 66% in the last four years. 

The company has also opened its new stores in Siliguri, Bhopal, Surat, and Bhuvneshwar. It has a first mover advantage as it is the only organized player in India with the capability of certifying, buying, and restoring pre-owned watches, and about 80% of the CPO Luxury watch market is organized rest 20% is unorganized players. 

To expand its product portfolio, the company entered into a partnership with Messika (Paris) group to be an exclusive partner and reseller of Messika Jewelry in India and a franchise contract with RIMOWA (a brand of LVMH) for the opening of the first luggage store in Jio world plaza, Mumbai. 

Observing these facts, it may be the outperformer in upcoming years. Investors must keep an eye on it.