Ethos IPO: Subscribe or avoid as issue opens today

18 May , 2022 By : Kanchan Joshi

Luxury and premium watch retail player Ethos Limited's Rs472-crore initial public offering (IPO) will open for subscription today and conclude on Friday, May 20, 2022. The firm has fixed a price band of Rs836-878 a share for its three-day issue.

The IPO consists of a fresh issue of equity shares aggregating to Rs375 crore and an offer-for-sale (OFS) of up to 1,108,037 equity shares. At the upper end of the price band, the public issue is expected to garner Rs472.3 crore.

As per market observers, Ethos shares are available at a premium (GMP) of Rs40 in the grey market today. The equity shares of the company are expected to list on BSE and NSE on Monday, May 30, 2022.

Proceeds from the fresh issuance will be utilised for repayment of debt, funding working capital requirements, opening new stores and general corporate purposes, the company said.

Should you subscribe to Ethos IPO?

“Ethos is valued at ~95x P/E on annualised FY22E basis. Sustained enhancement in profitable growth and improvement in return ratios would be key monitorables, going ahead. We assign AVOID rating and await consistency in improvement in profit metrics that the company has exhibited in recent quarters," said ICICI Securities.

Ethos has the largest portfolio of premium and luxury watches in India and retails 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.

“On the operational front, the company has posted inconsistent numbers. Net profit margin remained at 1.50% for FY21. The company as posted exceptional numbers for 9MFY22. The asking PE post fresh issue is around 358x based on FY21 numbers. The issue looks expensively priced. Valuations and current market conditions may wary the investors while subscribing for the issue," said Abhay Doshi, Founder at UnlistedArena.