Ethos Ltd.: Avoid

  • Date

    18 May 2022 - 20 May 2022

  • Price Range

    ₹836 - ₹878

  • Minimum Order Quantity


  • (D) RHP


Ethos Limited is the largest luxury and premium watch retailer in India. The company delivers premium luxury watches through websites, social media platforms and physical stores. Ethos Limited operates on an omnichannel model and allows customers to order products either offline or online and have the flexibility of buying products at one store and returning at another or browsing product catalogues and placing orders online with doorstep delivery. The company’s watch portfolio has 50 premium brands including 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. The company has 50 physical retail stores in 17 cities in India including New Delhi Mumbai, Bengaluru, Hyderabad, Chennai, Kolkata, Chandigarh, Ahmedabad, Jaipur, Lucknow, Gurgaon, Guwahati, Ludhiana, Nagpur, Noida, Pune and Thane. Ethos Limited has 7,000 different premium watches and 30,000 watches in stock at any given time.
Objects of the issue:
The net proceeds of the Fresh Issue are proposed to be utilised as:
  • Repayment or pre-payment, in full or in part, of all or certain borrowings availed by the company;
  • Funding working capital requirements of the company
  • Financing the establishment of new stores and renovation of the certain existing stores
  • Financing the upgradation of ERP
  • General Corporate Purposes
Investment Rationale:
Strategically located and well-invested store network with an attractive in-store experience
Ethos is the largest retailer for luxury watches in India commanding a 20% market share of the organized market for luxury watch retail in India. They have the sizeable portfolio of premium and luxury watches in India enabling them to retail 50 premium and luxury watch brands. Ethos benefits from strong levels of domestic demand for luxury watches. Brands command significant pricing power, which has enabled them to raise the list prices of their products almost every year and to carefully monitor and control potential arbitrage across regions. The company derives significant benefits from the tendency of consumers in the luxury watch markets to become repeat customers and span age and income groups. The company’s understanding of the luxury customers has enabled them to evolve their luxury customer base, enabling them to drive the sales of their luxury and high luxury watches. Their networks of retail stores allow them to cater to a large section of consumers and ensure effective penetration of the luxury watch brands that they retail. At the upper end of the price band, the issue is valued at a P/E of 96x based on FY22 annualized sales, which we believe is aggressively priced. As we are witnessing the negative market sentiment towards the expensively valued stocks, we suggest investors to “Avoid” this issue