Ethos Limited is Bharat's one of the largest luxury and premium watch retail player having 13% share of the total retail sales in premium and luxury segment and a share of 20% when seen in exclusively luxury segment in the financial year 2020, delivering a content-led luxury retail experience to the customers through the online and physical presence. In addition to the chain of 50 physical retail stores in 17 cities in Bharat in a multi store format, they offer an Omnichannel experience to the customers through the website and social media platforms. Company has the sizeable portfolio of premium and luxury watches 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. They enjoy a healthy market share of 20% in the luxury watch retail segment and 13% in the premium and luxury watch retail segment in Bharat. In addition to the premium and luxury watch retail, they also undertake retail of certified pre-owned luxury watches since Fiscal 2019. Company's website 'www.ethoswatches.com' is Bharat's largest website for premium and luxury watches in terms in number of brands and watches offered. In the industry, watches are categorised on the basis of price segments ranging from the high luxury price point (Rs 10 lakhs and above per watch), luxury watch segment (Rs 2.5 lakhs - Rs 10 lakhs per watch), bridge to luxury segment (Rs 1 lakh - Rs 2.5 lakhs per watch), premium segment (Rs 0.25 lakhs - Rs 1 lakh per watch) and fashion and mass segment (up to Rs 0.25 lakhs per watch). On its website visitors can research about the latest watch launches, reviews and choose from over 7,000 premium, bridge to luxury, luxury and high luxury watches across 50 brands and as of the December 31, 2021, the website had 21,844,216 number of visitor sessions. They give the customers the ability to shop online or to touch and feel their shortlisted watches in the comfort of their homes or at one of their 50 stores. They also have a luxury watch helpline for answering technical and other queries, along with live chat with luxury watch consultants on the website. As per financial performance, Ethos Limited has posted total income/net profits of Rs 445.09 Cr / Rs 9.89 Cr (FY19), Rs 461.01 Cr / Rs (1.33) Cr (FY20), Rs. 403.14 Cr / Rs 5.79 Cr (FY21) and Rs 429.35 Cr / Rs 15.99 Cr (9M FY22). So company has posted muted results during pandemic and in FY22, it will go beyond pre-covid level as per 9M FY22 result. Company has posted an average EPS of Rs. 2.21 and average RoNW of 2.83% for last three fiscals. Issue is priced at a P/BV of 8.32 as per NAV of 105.48 on 31.12.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 354 and as per FY22 annualised earnings P/E is around 96, which looks aggressively priced. As per RHP, there are no listed peers. On BRLM's front, two lead managers are associated with this IPO, and have handled around only 1 IPO in last three fiscals. The last IPO opened above issue price and currently trading below issue price. ( As on 15.03.22) As per financials, Ethos Limited has shown average growth, RoNW is 3.72% and P/E is respectively 354 and 96 as per FY21 and annualised FY22 earnings, which looks aggressively priced. Company is luxury and premium watch retail player and sector has good competition. As Bharat is growing, we may see growth in this segment also. So, we give AVOID rating for this IPO.
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