scorecardresearchLuxury watch seller Ethos announces IPO; Here's all you need to know

Luxury watch seller Ethos announces IPO; Here's all you need to know

Updated: 13 May 2022, 08:54 AM IST

  • Ethos says the company has 13% market share of the total retail sales in premium and luxury segment and a 20% share in exclusive luxury segment in 2020. 

Representational image. mint

Representational image. mint

Premium and luxury wristwatch seller Ethos Ltd is raising 375 crore via an initial public offer (IPO) and offer for sale (OFS). The company has put over 11 lakh shares on the block.

An OFS is when the existing shareholders of a private company offer to sell part or all of their shares as part of the IPO. In this, the money thus generated go to the shareholders and not the company. Companies follow this route to give an exit to its existing shareholders or allow promoters to sell part of their holdings. 

Key numbers

Issue Size: 468-472 crore

Face value of each share: 10 

Number of shares (In '000): 55,93,682-53,79,107

Price Band: 836-878

Bid Lot: 17 shares per lot. 

Post Issue Expected Market Capitalisation: 1970-2050 crore. 

Issue Opens: May 18, 2022

Issue Closes: May 20, 2022

Listing exchanges: BSE and NSE.

An IPO is a method through which a private business identifies itself as public by offering its stock to the public for the first time.

All about the company

Ethos was set up in 2007. The promoters of the company are; KDDL Ltd, Mahen Distribution Ltd and Yashovardhan Saboo. The three promoters hold 77.52% of the company. Their shareholding is expected to fall to 59.81% post the listing.

Other promoter group currently has 3.49% holding which is expected to reach 1.84% post listing.

General public holds over 18% of the company so far and is expected to hold nearly 38% post listing.

The company claims a 13% market share in total premium and luxury watch market and a 20% share in exclusive luxury segment as of 2020.

Ethos has a 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, Axis Capital in an IPO note said.

In the nine months ended December 2021, over two-thirds of its watch sales came via its offline stores and 33.29% from its website, it said.

Ethos sells watches as categorised on the basis of price segments ranging from:

• High luxury price point ( 10 lakhs and above per watch),

• Luxury watch segment ( 2.5 lakhs - 10 lakhs per watch),

• Bridge to luxury segment ( 1 lakh - 2.5 lakhs per watch),

• Premium segment ( 0.25 lakhs -1 lakh per watch),

• Fashion and mass segment (up to 0.25 lakhs per watch).

Category-wise contribution to total sale of products:

Category-wise contribution to total sale of products

Brief Financials

As of December 2021, the nine-months ended financial year 2022, had a net worth of 198 crore, up from 155 crore in the full financial year 2021.

Its reserves stood at 179.27 crore versus 137.38 crore in the given period.

Revenues were 418.59 crore as against 386.57 crore while pure profits, or EBITDA, was at 56.29 crore in nine months of 2021 versus 56.44 crore is full year of 2021.

The company's net profit in the given nine months stood at 15.99 crore as against 5.79 crore in 2021 with net profit margin more than doubling to 3.82% versus 1.50%.

What's the money for?

Off the 375 crore that the company intends to raise, 29.89 crore is for debt payments.

234.96 crore is earmarked to funds its working capital.

33.27 crore will be kept to set up new or refurbish existing stores.

The company said, in the fiscal 2022, it intends to use only 25 crore of the money budgeted for working capital while 104.99 crore each of the 234.96 crore will be used in financial year 2023 and 2024, respectively.

29 crore from the new and refurbishment kitty will be used in fiscal 2023 and the rest in 2024, it said.

How the existing shareholders stand to gain

Promoters'  and other shareholders' acquisition cost of each share of Ethos

Ethos said, Abakkus Growth Fund has already subscribed to 3,02,663 share as part of pre-IPO placement at a price of 826 per share. The company has raised 25 crore from this.

Pre-owned watch market a game-changer?

Axis Capital said, “In addition to their premium and luxury watch retail, Ethos also undertake retail of certified pre-owned luxury watches under ‘Certified Pre-Owned’ (“CPO”) luxury watch lounge located at New Delhi. CPO is a destination for selling and buying pre-owned luxury watches under technical expert supervision providing a 360- degree physical inspection and verification of watches and certified with a 2 year warranty. The overall luxury pre-owned market in India was valued at approximately 40 crores - 50 crores during financial year 2020, which was largely dominated by the unorganised sector contributing almost 80% of the market.”

First Published: 13 May 2022, 08:51 AM IST