Ethos Limited IPO: All You Need to Know


Luxury watch retailer Ethos Limited launched its three-day initial public offering (IPO) on May 18. The company sells some of the best-in-class premium watches in the world today. In this article, we analyse the company and its IPO.

Company Profile - Ethos Limited

Ethos Limited is one of the largest luxury and premium watch retailers in India. It had a 13% market share of the total retail sales in the premium & luxury watch segment as of FY20. Moreover, the company had a 20% market share exclusively in the luxury watch segment during the same period. Ethos sells 50 watch brands, including Omega, TAG Heuer, Rado, Longines, Tissot, Oris SA, and Rolex. These brands use expensive materials and delicate craftsmanship to create unique timepieces.

The company currently operates 50 physical stores across 17 cities in India. The stores are categorised into: 14 Ethos Summit stores and one airport store, 14 multi-brand outlets and 10 Ethos boutiques, 10 luxury segment mono-brand boutiques offering a single luxury watch brand, and one Certified Pre-Owned (CPO) luxury watch lounge. Its top three stores are located in the National Capital Territory of Delhi and Bengaluru (Tier-1 cities), accounting for one-third of its revenue.

Ethos also provides an omnichannel experience to customers through its website and social media platforms. Their online sales accounted for 37.64% of the total sales in FY21. The company’s loyalty program, called Club Echo, is a key source of repeat sales. They had access to a high net-worth Individual (HNI) base of over 2,83,300 at the end of March 31, 2022.

The company is a subsidiary of KDDL Limited, a leading manufacturer of watch components and high-quality precision stamped components.

About the IPO

Ethos Ltd's public issue opens on May 18 and closes on May 20. The company has fixed Rs 836-878 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 10 each) aggregates to Rs 375 crore. The IPO also includes an offer for sale (OFS) by promoters and early investors, aggregating to Rs 97.29 crore. Individual investors can bid for a minimum of 17 equity shares (1 lot) and in multiples of 17 shares thereafter. You will need a minimum of Rs 14,926 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 221 equity shares (13 lots).

Ethos will utilise the net proceeds from the IPO for the following purposes:

  • Repayment/prepayment of borrowings - Rs 29.89 crore
  • Funding working capital requirements - Rs 234.96 crore
  • Establishing new stores - Rs 33.27 crore 
  • Renovating existing stores and upgrading enterprise resource planning (ERP) software - Rs 1.98 crore
  • General corporate purposes.

The total promoter holding in the company will decline from 81.01% to 61.65%.

Financial Performance

Ethos’ revenue figures are inconsistent. It posted a 15.5% YoY decline in revenue to Rs 386.6 crore for the financial year 2020-21 (FY21). Net profit stood at Rs 5.79 crore in FY21, compared to a loss of Rs 1.33 crore in FY20. EBITDA fell 23% YoY to Rs 39.7 crore in FY21. The luxury and high luxury watch segment sales constituted ~58% of the total sales in FY21. Going forward, the growth of online retailers could create pricing pressures.

Interestingly, the company reported a revenue of Rs 418.59 crore during the first nine months of FY22 and the net profit jumped to Rs 15.99 crore.

Risk Factors

  • Ethos does not have definitive agreements for the supply of products or fixed terms of trade with a majority of its suppliers. The failure to successfully leverage supplier relationships and networks could adversely affect the company.
  • The company’s business partly depends on the continued success and reputation of third-party brands across the globe. Any negative impact on these brands or the failure to protect intellectual property rights may severely affect Ethos’ operations.
  • Most of the company’s suppliers work with them on a non-exclusive basis. In the absence of exclusivity with suppliers, Ethos may be subject to stiff competition from entities that have more resources.
  • Ethos is dependent on watch brands for the manufacturing of all the products it sells. Any disruptions in third-party manufacturing facilities or the failure to adhere to relevant quality standards could harm the company’s reputation.
  • The inability to identify customer demand accurately or maintain an optimal level of inventory in stores may adversely impact its operations.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Emkay Global Financial Services and InCred Capital Wealth Portfolio Managers. Ethos Ltd filed the Red Herring Prospectus (RHP) for its IPO on May 6. You can read it here. Out of the total offer, 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors.

Ahead of the IPO, Ethos raised Rs 141.68 crore from nine anchor investors.


According to ICICI Securities, the premium and luxury watch market is expected to grow at a ~12% CAGR from Rs 6,600 crore in FY20 to Rs 11,900 crore in FY25. The high luxury watch market is expected to grow at a CAGR of 14% to Rs 1,040 crore over the next five years. Ethos plans to increase its store count by 13 over the next few years. Its business model requires access to high working capital to stock up inventory. A significant portion of the IPO proceeds will be used for this purpose. They also aim to improve the assortment of existing brands and bring new brands to India through exclusive partnerships. 

Before applying to this IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. Do consider the risks associated with the company and come to your own conclusion.

What are your views on Ethos Ltd’s IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

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