The initial public offering of Ethos, one of the largest premium and luxury watch retailers in India, was subscribed 1.04 times by the end of day three or the final day of the bidding on May 20.
Investors had bid for 41.38 lakh shares against an issue size of 39.79 lakh units. Retail investors had subscribed 84 percent of the portion set aside for them. Non-institutional investors had bid for 1.48 times of the shares allotted to them, while qualified institutional buyers subscribed 1.06 times of their quota of shares.
The company is looking to raise Rs 472 crore through the fresh issue of shares aggregating to Rs 375 crore and an offer for sale of 1,108,037 shares worth Rs 97.29 crore by shareholders and promoters.
The price band for the offer has been fixed at Rs 836-878 a share.
After the issue, promoter holding will drop by 19.36 percent to 61.65 percent.
According to a report from Anand Rathi Research, the company’s revenue grew around three percent in FY20 and fell 16 percent in FY21.
The EBITDA (earnings before interest, tax, depreciation and amortisation) margins ranged from around 13 to 2 percent, while profit after tax margins ranged from around 10 to 0.3 percent over FY19-21.
For the first nine months of FY22, revenue was Rs 420 crore and EBITDA margin came in at 10.9 percent.
The return on equity stood at around four percent in FY21 and return on capital employed came in at 2.4 percent in FY21, while RoE and RoCE were around eight and nine percent in FY19.
The company had a net debt of Rs 31.5 crore in FY21, which it pared to Rs 13.1 crore in the nine months of FY22.
“At the high end of the issue price band (Rs 878), the stock is valued at 285x FY21 P/E and 55x FY21 EV/EBITDA and we reckon a high and rising market share and unique brand partnerships to be positives,” Anand Rathi Research said, recommending that investors “subscribe” to the issue.Disclaimer: The views and investment tips of experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.