Ethos lists with a 6% discount on stock exchanges; see BSE and NSE share prices for Ethos

On Monday, May 30, Ethos Ltd, one of the biggest watch sellers in the Indian premium and luxury watch sector, entered the market. Ethos' shares were offered at a discount on the NSE for Rs 825 per share, which is 6% less than the IPO price range of Rs 836–878 per share. The stock's BSE IPO price was Rs 830 per share. The company had started its initial public offering (IPO) on May 18, and May 20 was the last day to subscribe. Through a fresh issue of shares totaling up to Rs 375 crore and an offer for sale of 1,108,037 shares by shareholders and promoters totaling up to Rs 97.29 crore, the business raised Rs 472 crore in the IPO at Rs 878 per share.

With a huge collection of high-end timepieces, Ethos can sell 50 high-end watch brands in India, including Rolex, Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Bvlgari, Rado, Longines, and Tissot. In India, the company holds a 13 percent market share in the "premium and luxury watch retail" sector.

Ethos Valuation

"Revenues have expanded over the past five years at a moderate pace of 11% CAGR in FY17-22" (annualizing 9MFY22 sales). The business has recorded average PAT margins of 2-2.5%. (except for 9MFY22 wherein the company reported higher PAT margins of 3.8 percentofpercentannualized). Ethos has single-digit RoE despite using an asset-light business model because of higher capital blockage in inventory (Inventory days: 170+) and lower profitability (7-8 percent). Ethos is valued at 95x P/E on an annualized basis for the FY22E at the upper end of the pricing range, according to a note from ICICI Securities.

What Should Investors Do?

To investors, When compared to the company's performance during the previous year, the Ethos issue price appears to be pricey, according to Ravi Singh, vice president and head of research at Share India. Current market circumstances and valuations indicate that the IPO may list at or slightly below the issue price. For short-term gains or until the market attitudes calm, investors may book their positions and wait to re-enter at lower prices. The stock market's Monday opening will have a significant impact.

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