Ethos IPO opens for subscription on 18 May 2022 and is scheduled to close on 20 May 2022. As part of a comprehensive Ethos IPO review, we have compiled the major strengths and risks of the company as well as broker recommendations .
Ethos is India’s largest luxury and premium watch retail player with a network of 50 physical retail stores in 17 cities in India in a multi store format. The company also offers an Omnichannel experience to customers through its website and social media platforms. It has the largest portfolio of premium and luxury watches in India enabling it to retail 50 premium and luxury watch brands like Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Bvlgari, H. Moser & Cie, Rado, Longines, Baume & Mercier, Oris SA, Corum, Carl F. Bucherer, Tissot, Raymond Weil, Louis Moinet and Balmain.
As its offline and online channels are integrated, customers can place orders for products either offline or online and have the flexibility of buying products at one store and returning at another or browsing its product catalogues and placing orders online with doorstep delivery.
Ethos IPO Review – Strengths
- Leading luxury watch Omnichannel retail player
- Access to a large base of luxury customers
- Strong and long-standing relationships with luxury watch brands and luxury group
- Leadership position in an attractive luxury watch market
- Early mover advantage in certified pre-owned business
- Founder-led company supported by a professional management team
Ethos IPO Analysis – Risk Factors
- No definitive agreements with suppliers for supply of products or fixed terms of trade
- Excessive reliance on suppliers. Top 5 suppliers accounted for 66.87% of total purchases as on 31 December 2021.
- Business and sales are significantly concentrated among certain stores
- Ethos does not own the “ETHOS” and “SUMMIT” brands/trademarks. These are owned by one of the promoters KDDL Limited.
- Dependence on few stores for revenues. Top three stores accounted for 32.58% of revenues in nine months ended 31 December 2022.
Ethos IPO Analysis – Financial Performance
| FY2019 | FY2020 | FY2021 | 9M FY2022 | |
| Revenue | 445.1 | 461.0 | 403.1 | 429.3 |
| Expenses | 428.6 | 458.7 | 395.2 | 407.7 |
| Net income | 9.9 | (1.3) | 5.8 | 16.0 |
| Net Margin (%) | 2.2 | (0.3) | 1.4 | 3.7 |
Ethos Valuations & Margins
| FY2019 | FY2020 | FY2021 | 9M FY2022 | |
| EPS | 5.22 | (0.75) | 3.15 | 8.74 |
| PE ratio | NA | NA | 265.40 – 278.73 | NA |
| RONW (%) | 7.58 | (0.89) | 3.72 | 8.07 |
| ROCE (%) | NA | NA | NA | NA |
| EBITDA (%) | NA | NA | NA | NA |
| Debt/Equity | 1.08 | 1.10 | 0.78 | 0.60 |
| NAV | NA | NA | 85.43 | 105.48 |
Ethos IPO Review – Broker Calls
Angel One – Neutral
Arihant Capital –
Ashika Research –
Asit C Mehta –
BP Wealth –
Canara Bank Securities – Avoid
Choice Broking – Avoid
Elite Wealth –
GEPL Capital – Subscribe for long term and avoid for listing pop up
Hem Securities – Subscribe
ICICIdirect – Avoid
Jainam Broking – Avoid
KR Choksey –
LKP Securities –
Marwadi Financial Services –
Nirmal Bang – Subscribe for long term
Reliance Securities –
Religare Broking –
Samco Securities –
Share India Securities –
SMC Global –
Systematix –
Ventura Securities –
