The initial public offering of Ethos Limited, one of the largest premium and luxury watch retailers in India, opened on May 18 and was subscribed 27 percent at the end of the first day, with investors putting in bids for 10.7 lakh shares against an IPO size of 39.79 lakh units.
The company intends to garner Rs 472 crore through the fresh issue of equity shares aggregating to Rs 375 crore and an offer for sale of 1,108,037 shares aggregating up to Rs 97.29 crore by shareholders and promoters.
Retail investors had bid for 53 percent, or 10.34 lakh shares, of the portion set aside for them. Non-institutional investors had bid for 36,822 shares or 4 percent, while qualified institutional buyers were yet to subscribe to the issue.
The price band for the offer has been fixed at Rs 836 – 878 per equity share of the face value of Rs 10 each.
After the issue, the promoter holding will decline 19.36 percent and come down to 61.65 percent from 81.01 percent.
According to a report from the research firm Anand Rathi Research, the company’s revenue grew around 3 percent in FY20 and fell around 16 percent in FY21.
The EBITDA (earnings before interest, tax, depreciation and amortization) margins ranged from around 13 percent to 2 percent, while profit after tax margins ranged from around 10 percent to 0.3 percent over FY19-21.
For the first nine months of FY22, revenue was Rs 420 crore and the EBITDA margin came at 10.9 percent.
The return on equity (RoE) stood at around 4 percent in FY21 and return on capital employed (RoCE) came in at 2.4 percent in FY21, while RoE/RoCE were around 8 percent / 9 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 of the issue price-band (Rs878), 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”, a report from Anand Rathi Research said, while 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.