Ethos Limited is a premium watch retailer company. It is the largest luxury watch distributor in the country. The company delivers their products via websites and physical stores. It also boosts their sales through social media platforms. Ethos Limited’s business model is an omnichannel distribution model. Let’s delve deep into understanding some key elements about the Ethos Limited IPO.
Ethos Limited watch portfolio has a diversified brand. It has an association with 50 premium brands. It also includes 7,000 premium watches by these companies. Ethos also sells normal watches. In this segment, the company sells 30,000 different models. Ethos has a strong association with many premium watch stores. It includes:
|Raymond Weil||Carl F. Bucherer||Panerai||H. Moser & Cie|
|Jaeger LeCoultre||Rado||Baume & Mercier||Tissot|
|Louis Moinet||Balmain||Omega||IWC Schaffhausen|
The company has a wide distribution network. It has 50 physical retail stores. Ethos has categorized its stores as follows:
|Ethos Summit Stores||14 stores|
|Airport store||01 store|
|Multi-Brand Outlets||15 stores|
|Ethos Boutiques||10 stores|
|Luxury Segment Mono-Brand Boutiques||09 stores|
|CPO luxury watch lounge||01 store|
Ethos limited have 13% of the market share in the premium and luxury watch segment. Ethos also has a significant market share of 20% in the exclusive luxury segment. Ethos Limited has also entered a new business vertical. It has started retailing certified pre-owned luxury watches. The company started in 2019. Ethos Limited also operates its website www.ethoswatches.com. It is the largest website for premium watches regarding brand engagement. Ethos Limited has 424 employees on its payroll.
These stores are present in 17 cities in India. Ethos limited has its stores in all metro cities of the country. It also holds a physical outlet in Tier 1 and Tier 2 cities. The stores of Ethos Limited are therein:
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the loans of the company. It is done on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
- The company intends to finance their capital expenditure. It is to be used for establishing new stores. It is to be done for the renovation of existing stores.
- The company wants to upgrade its enterprise resource management and planning software.
ETHOS LIMITED IPO DETAILS:
Ethos Limited is a company with its headquarters in Himachal Pradesh. It is located in the Parwanoo district of the state. The company recently got approval from SEBI. It earlier filed its DRHP for approval. The company is coming up with its IPO offer. The IPO offer of the company is Rs. 472.29 crores. It is a mix of an OFS offer of Rs. 97.29 crores. It also contains an issue of fresh equity worth Rs. 375.00 crores by the company.
The company stated that it would utilize funds as below:
|Repayment and pre-payment of the borrowings of the company||Rs. 29.89 crores|
|Working capital||Rs. 234.96 crores|
|Setting up of new stores. Also used for renovation of existing stores||Rs. 33.27 crores|
|Upgradation of ERP||Rs. 1.98 crores|
|General corporate purpose||Remaining funds|
The company fixed the price band to Rs. 836.00 – Rs. 878.00 per equity share. Post allotment, the company’s shares will be listed on BSE and NSE. The IPO issue offer constitutes 23.04 % of the post issue fully paid-up equity capital base of the company. The company also completed their Pre – IPO allotment round. In it, the company allotted 302,663 equity shares of the company. It was allotted at Rs. 826.00 per share. It was done to raise Rs. 25 crores funding. It reduced the IPO fresh equity offer to Rs. 375.00 crores. Post IPO offer, the fully paid-up equity capital of the company will increase. It will increase from Rs. 19.08 Crores to Rs. 23.35 crores. On the upper band of IPO, the company’s market share will be Rs. 2050.06 crores.
|IPO Opening Date||May 18, 2022|
|IPO Closing Date||May 20, 2022|
|Issue Type||Book Building Type Issue IPO|
|Face Value||Rs. 10 per equity share of the company|
|IPO Price Band||Rs. 836 – Rs. 878|
|Market Lot||One lot of 17 equity shares of the company|
|Minimum Order Quantity||One lot corresponding to 17 equity shares of the company|
|Minimum Order Price||Rs. 14,926|
|Maximum Order Quantity||13 lots corresponding to 221 equity shares of the company|
|Maximum Order Price||Rs. 194,038|
|Maximum Retail Order Quantity||13 lots corresponding to 221 equity shares of the company|
|Minimum HNI Order Quantity||14 lots corresponding to 238 equity shares of the company|
|Listing At||BSE, NSE|
|Issue Size||—— equity shares of the company that corresponds to Rs. 472.29 Crores|
|Fresh Issue||4,271,080 equity shares of the company, which corresponds to Rs. 375.00 Crores|
|Offer for Sale||1,108,037 equity shares of the company, which corresponds to Rs. 97.29 Crores|
|Basis of Allotment Type||% Of the Offer been allotted by IPO|
|Qualified Institutional Buyer||50|
|Price Band Announcement:||May 10, 2022|
|Anchor Investors Allotment:||May 17, 2022|
|Basis of Allotment Date||May 25, 2022|
|Initiation of Refunds||May 26, 2022|
|The Credit of Shares to Demat Account||May 27, 2022|
|IPO Listing Date||May 30, 2022|
STRENGTHS AND OPPORTUNITIES OF ETHOS LIMITED IPO:
- Ethos Limited has access to a large base of luxury Customers.
- Ethos Limited holds a Deep understanding of its digital platform. It also has an understanding of its Omnichannel commerce.
- It is the largest luxury watch distributor in the country. The company is also the largest company engaged in the premium watch segment.
- The company enjoys strategically benefits from its location, store network and in-store experience.
- Ethos Limited has a strong and long-standing relationship with its associated partners. The partners are luxury groups and luxury watches.
- The company has leadership in the luxury watch market.
- Ethos has an experienced and highly innovative team.
- The company has a strong network for their sales. The omnichannel business model has helped the operations of the company.
- Ethos also has an opportunity to enter into the premium fragrance business segment. It will boost its margins on both the top line and bottom line.
WEAKNESS AND THREATS OF ETHOS LIMITED IPO:
- Ethos Limited has registered inconsistency in its financial and operations matrix. It raises concern over the sustainability of the growth of the company.
- The IPO issue of the company is at a high valuation. It is priced at a 96 P/E ratio. On FY21 Earnings, the issue becomes at a valuation of P/E of 354.
- Ethos Limited is subject to various regulatory guidelines litigations.
- The company is highly dependent on its associated watch brands. The company is a retail outlet firm. So, any problem in the manufacturing of the watch can negatively impact the company.
- Ethos Limited’s success also depends on the success of the brands under its association.
- The company also needs to manage their inventory properly. Any mismanagement can lead to a negative impact on the company.
- Ethos Limited’s other major concern is of prediction of customer demand. It also needs to be updated with all the latest trends.
- Ethos Limited also don’t have any definitive agreement. Any disruption in supply from their associated brands can hamper the company’s operation. It can lead to a significant impact on the profitability of the company.
- The presence of First copy articles is also a threat to their business operation.
- Ethos Limited is engaged in very stiff competition. It faces a high level of competition from many other firms, sellers and retailers.
FINANCIAL TRENDS OF ETHOS LIMITED IPO:
|Particulars||For the year ending with the amount as in Rs in Lakhs|
|31 December 21||31 March 21||31 March 20||31 March 19|
|Profit After Tax||1,598.78||578.53||-133.40||988.88|
|PARAMETER||MARCH 21||MARCH 20||YoY %|
|Earnings Per Share (Rs)||3.18||-0.73||533.68|
|Book NAV/Share (Rs)||85.18||82.03||3.85|
|Tax Rate (%)||28.55||167.18||-82.92|
|Core EBITDA Margin (%)||11.02||12.10||-8.92|
|EBIT Margin (%)||7.23||5.63||28.46|
|Pre -Tax Margin (%)||2.09||0.43||382.97|
|PAT Margin (%)||1.50||-0.29||613.65|
|Cash Profit Margin (%)||9.61||6.87||39.86|
|Asset Turnover (x)||0.97||1.29||-24.92|
|Sales/Fixed Asset (x)||2.39||4.53||-47.11|
|Working Capital/Sales (x)||3.56||4.52||-21.27|
|Fixed Capital/Sales (x)||0.42||0.22||89.07|
|EV/Net Sales (x)||0.13||0.18||-29.12|
|EV/Core EBITDA (x)||0.84||1.42||-40.91|
|Net Sales Growth (%)||-15.57||3.23||-582.18|
|Core EBITDA Growth (%)||1.28||55.17||-97.68|
|EBIT Growth (%)||8.46||-21.65||139.08|
|PAT Growth (%)||533.68||-109.98||585.26|
|EPS Growth (%)||533.68||-109.26||588.45|
|Total Debt/Equity (x)||0.34||0.51||-33.91|
|Current Ratio (x)||1.73||1.58||9.70|
|Quick Ratio (x)||0.40||0.33||21.38|
|Interest Cover (x)||1.41||1.08||29.93|
COMPARISON WITH PEERS OF ETHOS LIMITED IPO:
As per the DRHP of the company, there are no listed companies as their competitor.
PROMOTERS OF ETHOS LIMITED IPO:
The promoters of the company are as follows:
- Yashovardhan Saboo
- KDDL Limited
- Mahen Distribution Limited
|Pre – Issue Share Holding||81.01%|
|Post Issue Share Holding||61.65%|
Plot No. 3, Sector-III,
Parwanoo, Himachal Pradesh -173 220
Phone: + 91 172 2548 223/24
ETHOS LIMITED IPO REGISTRAR:
KFintech Private Limited
KFintech, Tower-B, Plot No 31 & 32,
Financial District, Nanakramguda, Gachibowli,
Hyderabad, Telangana India – 500 032.
Phone: 04067162222, 04079611000
IPO LEAD MANAGER(S):
- Emkay Global Financial Services Ltd
- Incred Capital Financial Services Pvt Ltd
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