Shares of recently-listed Ethos Ltd have caught investors’ attention in recent times. The stock, which made a poor debut on the bourses by closing at ₹802.60 on the BSE against the issue price of ₹840 on May 30, has made a smart turnaround in the last three months.
According to analysts, the stock has seen accumulation by mutual funds that helped the stock to hit a high of ₹1,147 on the NSE on August 16.
While on Wednesday Ethos closed at ₹1,050, up 0.58 per cent on the NSE, it ended 0.17 per cent lower at ₹1,041.20 on the BSE. Since listing date, the stock has given a return of 30.74 per cent.
According to IDBI Capital study, Ethos was one of the top new additions by MFs. It added that Union Asset Management Company Pvt Ltd bought over 64,000 shares in August.
Analysts have turned bullish on the luxury watch-maker, thanks to its pan-India physical presence (50 stores in 17 cities) and a distinguished online presence.
No pan-India rival
Emkay Global, initiating coverage with Buy recommendation and a target price of ₹1,400, said the company has no pan-India rival, and “we reckon the company will achieve its targeted 30 per cent market-share in each micro-market (vs 15 per cent overall share) leveraging its balance sheet, flagship stores and exclusive brand partnerships.”
India is at the cusp of exponential growth in luxury watch sales and it expects 9 lakh HNWIs in India by FY35 (3 lakh at FY22-end), implying 9 per cent CAGR over FY25-35. “Our forecast may be conservative, as extrapolation of trends witnessed in Brazil/China suggests 12 per cent FY25-35 CAGR,” it added.
The company has posted a profit of ₹12.63 crore on revenues of ₹173.56 crore for the quarter ended June 2022. For FY22, the corresponding figures are ₹23.36 crore and ₹577.28 crore.
According to Nirmal Bang, the company has sizeable portfolio of premium and luxury watches in India enabling it to retail 50 premium and luxury watch brands including Omega, IWC Schaffhausen, Jaeger LeCoultre, Tissot and Raymond Weil.
Ethos has built its customer base over the years and continues to aim to attract new customers to its platform by providing an engaging shopping experience. As of March 31, 2022, the company had access to a HNI customer base of over 2.83 lakh. Demand for its products is directly proportional to the number of the HNI customers, it added.