Ethos Limited IPO

Ethos Limited

Issue Open

May 18, 2022

Price Band

₹ 836 to ₹ 878 per share

Issue Size

₹ 475 Cr

Credit of Shares to Demat


Issue Close

May 20, 2022

Bid Lot


Listing Exchange

May 30, 2022

Cut off time for UPI Mandate Confirmation


Issue Type

Book Built Issue IPO

Minimum Order Quantity


Allotment Details


Face Value

Rs 10 per equity share

Listing On

Nov 30, -0001



About the company:

Issue Details

Dates: May 18, 2022, to May 20, 2022

Price Band: Rs. 836 to Rs. 878 per share

Minimum Lot: 17 shares

Minimum Application Amount: Rs. 14,212 to Rs. 14,926

Total Issue Size: Up to Rs. 475 crores (Offer for Sale Rs. 100 crores)

Objects of the offer

The company will be issuing a fresh issue of Rs 375 crores while rest 100 crores will be Offer for Sale. The net proceeds of the fresh Issue will be used to repay or prepay all or a portion of the company's borrowings, in full or in part. The majority of the funds will be used to meet the company's working capital needs as well as to fund the opening of new stores and the remodeling of existing ones.


Pre & Post Shareholding


Corporate Profile & Business overview

Ethos Limited was incorporated on November 5, 2007, with KDDL Limited as one of the company's promoter. In the financial year 2020, Ethos was India's leading luxury and premium watch retailer, with a 13 percent share of overall retail sales in the premium and luxury category and a 20 percent share in the luxury category.


Ethos has a pan-India presence, with a network of stores and boutiques in towns and regions across the country. It has 50 locations in 17 different cities. Ethos Summit is home to only bridge to luxury, luxury, and high luxury brands, whereas Ethos Stores are home to the premium and fashion selection. The average selling price of their watches increased from Rs 73,261 in Fiscal 2019 to Rs 1,42,795 in 9MFY22.


Ethos also sells merchandise on its website. The fashion and below ranges are digitally enabled, while the premium and luxury ranges are voice enabled. Visitors can explore the latest watch debuts, read reviews, and choose from over 7,000 premium, bridge to luxury, luxury, and high luxury watches from 50 brands on their website, which had 21,844,216 visitor sessions as of the calendar year ending December 31, 2021.


Ethos loyalty program, Club Echo, has registered members, and repeat purchasers account for 35 percent of the company's annual revenue.




Particular (Rs. Crs)





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Cash Flow from Ops






The company had witnessed a decline in revenue from operations in FY21 owing to setback suffered from Covid-19 but bounced back in 9MFY22. EBITDA Margin has remained stable in the range of 12-15%. PAT margin has fluctuated between 0-4%, largely on account of the low margin business. ROE has remained below par throughout the years in the range of -1 to 8%. Debt-equity ratio trend has improved from 1.08x in Fiscal 2019 to 0.60x in 9MFY22.



Access to a large base of luxury customers: Ethos has access to about 283,300 HNI customers as of March 31, 2022. The number of sessions on their digital platform climbed throughout the calendar years, from 15.47 million in 2019 to 21.46 million on December 31, 2021. Each of their product lines is a discretionary item that is heavily dependent on consumer spending trends and, as a result, is vulnerable to factors that influence consumer spending.


Omni Channel Presence: Ethos was quick to build a solid digital infrastructure, which has been a crucial strength that has allowed them to grow their business and customer base. Their digital team is made up of around 70 people that work in various departments such as performance marketing, creative, content, social media, product/website, technology, and internet sales. Their website features over 50 brands, providing a wonderful environment for visitors to not only buy timepieces online, but also to learn about them and their histories.


Certified pre-owned business: Ethos also sells certified pre-owned luxury watches through its 'Certified Pre-Owned' ("CPO") luxury watch lounge in New Delhi, in addition to premium and luxury timepieces. Indian CPO Market is at a very nascent stage with CPO contributing only 0.2% of Overall Premium & Luxury watch market. In comparison, the global CPO luxury market was approximately 33% of its Overall premium & luxury watch market. This market, however, presents an opportunity for ETHOS to grow significantly from the current base, in line with global trends.


Leadership position in an attractive luxury watch market: Ethos is market leader in luxury category with 20% market share. The company’s 64% revenue comes from retail of luxury & high luxury watches. Premium watches have a retailer margin of 20% to 25%, whereas bridge to luxury watches have a margin of 25% to 28%, and luxury and above watches have a margin of 20% to 35%. Because the luxury and above watch segments demand higher margins, the selling of high-value luxury and above watches can be more profitable. The luxury watch market's tendency for customers to become repeat customers, across age and income levels, benefits the company significantly.


No exclusive suppliers: In the absence of exclusivity with their suppliers, the majority of their suppliers operate with them on a nonexclusive basis. Ethos may face competition from entities with greater financial resources. The majority of their suppliers do not have exclusive agreements with them. They may not be able to sell exclusive products that are not available through other Indian merchants if exclusivity is not granted.


Company's business partly depends on the success of third-party brands: The success of the company is directly tied to the performance of the watch brands it sells, including their reputation, financial condition, marketing tactics, product development, and general quality and success of their operations in comparison to competitors. Ethos has no control over such brand management or operations. As a result, a range of external variables influencing these brands could have a major negative impact on the company's business.


High Competition: Various domestic and foreign players compete against the company, which may have an impact on its competitive position and profitability. Some of their competitors may have a longer track record, more financial and technical assistance, product development and marketing resources, and a stronger brand reputation, allowing them to compete more effectively. The company’s pricing power may be impacted as a result of increased competition and the lack of exclusive agreements with suppliers.


Contingent Liabilities: As of December 31, 2021, March 31, 2021, and March 31, 2020, contingent liabilities stood at Rs 37.08 crore, Rs 36.54 crore and Rs 3.33 crore, respectively. If these liabilities materialize, it may adversely affect financial condition.


Valuations & Conclusion




NAV per share


Ethos Limited





Ethos has no listed Indian peer and hence its valuations are not comparable. Basis the annualized FY22 earnings, the issue is priced at a P/E of 75.36x. This valuation seems expensive especially considering the fact that the company has low return ratios, a mediocre financial performance as well as very small revenue size compared to other retail focused listed companies. Further, in March, 2022 the company had made a pre-IPO placement of Rs. 826 and now in less than 2 months the company is commanding a close to 6.5% higher price at the top band, even when the market sentiment has only worsened post March.


Fundamentally as well, while the company does command a leadership position, it doesn’t have any pricing power or exclusive suppliers. Further, the increasing competition in the sector is also a concern. 


So, taking into account these factors and considering that the company has no moat, we advise investors to ‘Avoid’ this IPO. 


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