Ethos Limited IPO

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i. Ethos Limited is India’s one of the largest luxury and premium watch retail player having 13% share of the total retail sales in premium and luxury segment and a share of 20% when seen in exclusively luxury segment in the financial year 2020.

ii. In addition to their chain of 50 physical retail stores in 17 cities in India in a multi store format, they offer an Omnichannel experience to its customers through their website and social media platforms. Company have the sizeable portfolio of premium and luxury watches in India enabling them 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.

iii. The company has about 2.5 million website users, over 2,83,300 active email subscriptions, 1,68,000 Instagram followers, 1,57,000 Facebook followers, and 12,300 You Tube subscriptions.

iv. Competitive Strengths:

a. Access to a large base of luxury Customers.
b. Deep understanding of digital and Omnichannel commerce.
c. Strategically located and well-invested store network with an attractive in-store experience.
d. Strong and long-standing relationships with luxury watch brands and luxury groups.
e. Leadership position in an attractive luxury watch market.
f. Experienced and committed management team with a proven track record.

Objects of the Ethos Limited IPO:

The company propose to utilise the Net Proceeds towards funding the following objects: 1. Repayment or pre-payment, in full or in part, of all or certain borrowings availed by the Company; 2. Funding working capital requirements of the Company; and 3. Financing the capital expenditure for (i) establishing new stores and renovation of certain existing stores and (ii) up-gradation of enterprise resource planning software 4. General corporate purpose
DRHP of Ethos Limited IPO
RHP of Ethos Limited IPO

Ethos Limited IPO Details:

Open Date: May 18 2022
Close Date: May 20 2022
Total Shares: 5379107
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue
Issue Size: 472.29 Cr.
Lot Size: 17 Shares
Issue Price: ₹ 836-878 Per Equity Share
Listing At: NSE,BSE
Listing Date: May 30 2022

Promoters And Management:

i. Yashovardhan Saboo, aged sixty-three (63) years is the Managing Director of the Company since November 5, 2007. He holds a post graduate diploma in management from Indian Institute of Management, Ahmedabad, Gujarat. He is the promoter of the Company and has vast experience of working in manufacturing and retail industry. He is also the promoter in KDDL Limited. He has been conferred with “Udyog Ratna” Award from PHDCCI in the year 2005. ii. Anil Khanna, aged sixty-three(63) years is an independent Director of the Company since November 5, 2007. He holds a degree in Bachelor of Arts (Economics, Mathematics) and is also a qualified Chartered Accountant from Institute of Chartered accountants of India. He holds Diploma in information system audit and is Certified Forensic Accountant and Fraud Detector from ICAI. iii. Nagarajan Subramanian, aged sixty-six (66) years is an independent Director of the Company since June 29, 2011. He holds a degree in Bachelor of Technology (Mechanical Engineering) from College of Engineering, Madras, Tamil Nadu and a post graduate diploma in management from Indian Institute of Management, Ahmedabad, Gujarat. Prior to joining the Company, he was associated with Titan Industries Ltd., Walt Disney India Pvt. Ltd. Currently, he is running “en theos consulting”, which is a boutique consultancy firm focusing on lifestyle retailing advisory.

Financials of Ethos Limited IPO:

Particulars (in crores) December-21 March 21 March 20 March 19
Revenue from operations 418 386 457 443
Purchase of stock-in-trade 342 260 342 349
Changes in inventory of stock-in-trade -41 20 -13 -34
Employee benefits expense 30 29 33 33
Other Expenses 41 35 44 38
Operating Profit 46 42 51 57
OPM% 11% 10% 11% 12%
Finance Cost 11 16 19 16
Depreciation 22 31 32 25
Other Income 10 16 3 1
Profit (Loss) before tax 21.00 8 1 16.00
Tax expens 56 2 3 6
Profit (Loss) for the period 15.00 5 -1 9
No.of shares 2 2 2 2
Earnings per share 7.5 2.5 -0.5 4.5

Comparison With Peers:

There are no listed companies in India that engage in a business similar to that of the Company.

Recommendation on Ethos Limited IPO:

Review and Recommendation of  Ethos Limited IPO by InvestorZone is 5/10 1. It is a premium and luxury brand of watches. It sells brands like Rolex, Tissot, 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. 2. Founded in 2003, under KDDL, listed company which has given good returns to investors in the last 10 years. However, in 2008, KDDL hived-off the retail business and separated the “Ethos” brand. 3. Ethos digital platform had 3.2 million sessions in December 31, 2021. As of March 31, 2022, they had about 2.5 million website users, over 2,83,300 active email subscriptions, 1,68,000 Instagram followers, 1,57,000 Facebook followers, and 12,300 You Tube subscriptions. 4. Revenue has increased from 445 Crores in FY19 to 572 Crores in FY22(E). A slow growth of 8.72%. 5. Profit also increase from 96 Crores in FY19 to 213 Crores in FY22(E). A decent growth of 30% in the bottom-line. Expenses have been reduced due to 41 Crores of inventory available in the books. 6. Company is generating decent CFO and FCF. 7. Valuation looks very stretched. Asking P/E is 96 if we annualised the 9MFY22 results. Its promoter KDDL, is available at 32x P/E. 8. They have done pre-IPO placement at Rs. 826 per share to Abakkus Growth Fund – 2.

Lead Manager of Ethos Limited IPO:

  1. InCred Capital Financial Services Pvt Ltd

Registrar of Ethos Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Ethos Limited Plot No. 3, Sector- III, Parwanoo, Himachal Pradesh -173 220 Phone: + 91 1792 232 462/233 402 Email: anil.dhiman@ethoswatches.com Website: https://www.ethoswatches.com/

Discussion on Ethos Limited IPO:

1 Comment

    IPO is priced at 96 P/E based on FY22(E)…

    KDDL is the promoter of the company. Company was started under this brand and later on in 2008, they have separated the retail watch business.

    KDDL has revenue of 770 Crores and currently, trading at P/E of 32, with Mcap of ~1000 Crores..

    While Ethos brand is coming at 96 P/E and ~2100 Crores Mcap.

    KDDL is one of the seller in IPO

    Incorporated in 1981, KDDL manufactures watch components like dials, hands and precision engineering goods under the brand name, Eigen

    Reply

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