scorecardresearchEthos IPO: Here's all you need to know about its Financials, business model,
Chandigarh-based Ethos Limited (Ethos) was incorporated on November 5, 2007.

Ethos IPO: Here's all you need to know about its Financials, business model, outlook

Updated: 19 May 2022, 08:51 AM IST

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

The Initial Public Offering (IPO) of Ethos Ltd., one of the largest retailers in the premium and luxury watch industry, opens for subscription on Wednesday. The issue is open for subscription until Friday, May 20.

The IPO consists of a fresh issue of equity shares aggregating to 375 crore and an offer-for-sale (OFS) of up to 1,108,037 equity shares.

The net offer will be reserved for qualified institutional buyers at 50% of the total offer size, retail investors at 35%, and non-institutional investors at 15%

The price band for the offer has been fixed at 836-878 per equity share with a face value of 10 each.

Meanwhile, Ethos Limited's initial public offering (IPO) is 22 per cent subscribed on May 18, 2022, at 3:24:00 PM.

Retail investors bid for 45 per cent of the allotted shares, or 8.84 lakh shares. Non-institutional investors had bid for 12,512 shares, while qualified institutional buyers were yet to subscribe to the issue.

Company Overview

Chandigarh-based Ethos Limited (Ethos) was incorporated on November 5, 2007. It is India’s one of the largest luxury and premium watch retail player, having a 13% share of the total retail sales in the premium and luxury segment and a share of 20% when seen in the exclusive luxury segment in the financial year 2020, delivering a content-led luxury retail experience to its customers through online and physical presence.

In addition, to its chain of 50 physical retail stores in 17 cities in India in a multi-store format, it offers an omnichannel experience to its customers through its website and social media platforms.

The Ethos Omnichannel approach is premised on its endeavour to provide experience, content, customisation, reach and convenience to its customers. Its website is India’s largest website for premium and luxury watches in terms of the number of brands and watches offered.

The Ethos website had 32,20,614 number of sessions. Visitors are assigned highly trained watch consultants, who help the customers to choose from the wide array of choices available. It gives customers the ability to shop online or to touch and feel their shortlisted watches in the comfort of their homes or at one of its 50 stores.

As of March 31, 2022, it 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 Youtube subscriptions.

Ethos offline and online channels are integrated. Customers can place orders for its products either offline or online and have the flexibility of buying products at one store and returning them at another or browsing product catalogues and placing orders online with doorstep delivery.


Ethos has a sizeable 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.

The company enjoys a healthy market share of 20% in the luxury watch retail segment and 13% in the premium and luxury watch retail segment in India. In addition to its premium and luxury watch retail, it has been selling certified pre-owned luxury watches since Fiscal 2019.

The company provides Club Echo, a loyalty programme with registered members, and 35% of business is generated by repeat buyers who are registered with the program. The details of the enrolment of new customers in their loyalty programme Club Echo and the repeat customers and revenue from such operations for the 9 month period ended December 31, 2021, Fiscal 2021, Fiscal 2020, and Fiscal 2019 are as follows:

Financial Year( in Cr)Club ECHO SalesRepeat TransactionsTotal Billing Club Echo %Repeat Share % (Value)
9 Months Period Ending Dec' 31,2021 407.66177.77487.2483.67%36.49%
Fiscal 2021388.57164.92448.7786.65%36.75%
Fiscal 2020421.56177.53524.5180.37%33.85%
Fiscal 2019367.45172.97512.8871.64%33.75%
Source: RHP, Axis Securities      

Industry Overview

The Indian watch market was valued at INR 13,500 Cr in FY 2020 and is expected to grow at a CAGR of 10.6% to INR 22,300 Cr by FY 2025, owing to factors such as increased discretionary spending on watches, the opening of more organised channels of purchase such as MBOs and online marketplaces & vertical specialists, increased penetration of smartwatches in the mid to premium category, omnichannel market organization, and so on.

The watch industry is dominated by the organised sector, having a 65% share of the overall market, and the unorganised market contributes 35%. While the organised watch market in FY 2020 was estimated at INR 8,700 Cr, the unorganised market was approximately INR 4,780 Cr.

Further, the luxury goods market in India is currently valued at INR 45,210 Cr. as of FY 2021. Premium and Luxury Fashion & Lifestyle segments have the highest share, with a 33% contribution in FY 2020, mainly because of their higher volumes.

The COVID-19 pandemic had a major impact on the luxury goods market, with the market contracting by 23% from FY 2020 to FY 2021. Other luxury product markets, which include experiential luxury, luxury wines and spirits, luxury leather goods, luxury consumer electronics, and luxury travel, were the most impacted segments, with the market contradicting by 36%. The premium and luxury car markets were the least impacted segments, down by 10%.

What is Omnichannel?

Ethos provides its customers with an omnichannel experience via its website and social media platforms.

According to sources, Omnichannel retail is a multichannel sales strategy that focuses on offering a continuous consumer experience. whether the customer is shopping online from a mobile device, a laptop or in a brick-and-mortar store.

Businesses use this marketing to promote their products and services across all channels, devices, and platforms using unified messaging, cohesive visuals, and consistent collateral.

Omnichannel commerce connects all channels. which means customers have a seamless experience across all platforms. Whether it's a social ad, an email newsletter, a mobile push notification, a conversion with a company chatbot, or a face-to-face chat with the store staff.

Objective of Issue

Ethos proposes to utilise the net proceeds towards funding the repayment or pre-payment, in full or in part, of all or certain borrowings availed by the company; Funding the company's working capital requirements, financing capital expenditures for opening new stores and renovating existing ones; and upgrading enterprise resource planning software and for general corporate purposes.

Particulars Amount ( in Cr)
Repayment or pre-payment, in full or in part, of all or certain borrowings availed by the Company29.89
Funding working capital requirements of the Company234.96
Financing the establishment of new stores and renovation of the certain existing stores33.27
Financing the upgradation of ERP1.98
General corporate purpose *
Total *


The company reported a profit of 57.85 crore in the financial year 2020-21, which was a net loss of 13.34 crore in the previous year. Company revenue declined to 4,031.42 crore from 4,610.06 crore during the period under review.

It clocked a profit of 159.88 crore in the nine-month period ended December 2021, with revenue from operations during the same period rose significantly to 4,293.4 crore.

Financials ( in lakhs) 93FY22FY21FY20FY19
Revenue from operations41859.338657.145784.944352.9
Other income1075.51657.2315.7156.7
Total Income42934.840314.246100.644509.6
Total Expenditure37303.734683.940626.838683.7
EPS (Rs)8.73.2-0.85.2
Source: RHP, HDFC Securities     

Key Risks

Below are some risks stated by HDFC Securities.

Dependent on watch brands for the manufacturing of all the products Ethos sells. Any disruptions at such third-party manufacturing facilities or failure of such third parties to adhere to the relevant quality standards may have a negative effect on its reputation, business and financial condition.

Any security breach or any failure in IT system or IT system of Ethos suppliers, failure to detect fraud on its part, may affect its operation and increase its operational costs, and cause losses.

The growth of online retailers may create pricing pressures, increase competition, and adversely affect the business, results of operations and financial condition.

The credit rating of Ethos has been downgraded in the past. Any future downgrading in the credit rating can make it difficult to raise finance for its requirements.

Ethos faces foreign exchange risks that could adversely affect the results of operations and cash flows.

Brokerage Views

ICICI Direct Research has assigned an 'avoid' rating to the issue, awaiting consistency in the improvement in profit metrics that the company has exhibited in recent quarters.

Angel One has assigned a 'Neutral' rating to the issue, considering the valuations for the company are high.

Nirmal Bang Equity Research said that the company is expanding its stores (13 new stores over the existing 50 stores in the next three years) and with new categories it believes Ethos can grow strongly.

"While we understand that the company is very small in comparison to other listed retail players and currently focused on one category," said Nirmal Bang, "we believe that there is scope for growth in the future and, on current valuations, it looks attractive on EV/EBITDA and EV/Sales basis, and thus, we recommend "Subscribe for Long Term."

Marwadi Financial Services recommends a "subscribe with caution" rating to the IPO as it believes the IPO is richly priced and the company will have to continue growing its business at a high growth rate in order to justify its valuation, which keeps us cautious from a long term perspective.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 19 May 2022, 08:12 AM IST