Ethos IPO opens tomorrow: 10 key things to know before subscribing to the public issue

2 Price Band 

The price band for the offer has been fixed at Rs 836-878 a share of the face value of Rs 10. The floor price is 83.60 times the face value and the cap price 87.80 times the face value of the share.

3 Offer details

The company is looking to raise Rs 472 crore through the fresh issue of shares aggregating up to Rs 375 crore and an offer for sale of 1,108,037 shares aggregating to Rs 97.29 crore by shareholders and promoters.

The promoter shareholding will decline 19.36 percent and come down to 61.65 percent from 81.01 percent stake held by them currently.

Of the IPO, 50 percent of the offer is reserved for qualified institutional buyers (QIBs), 35 percent for retail investors and the remaining 15 percent for non-institutional investors.

4 Objectives of the Issue

The company intends to utilise the net proceeds from the fresh issue to pre-pay or repay in part or full the existing loans availed by the company to an extent of Rs 29.89 crore. A sum of Rs 234.96 crore will be used towards funding the working capital requirements, Rs 33.27 crore for opening new stores and renovating existing ones and Rs 1.98 crore will be for the upgrade of ERP system. The remaining funds will be used for general corporate purposes, the company has said.

The company will not get any proceeds from the OFS portion.

5 Lot size

Investors can bid for a minimum lot size of 17 shares and in multiples thereof. The minimum investment for a retail investor works out to be Rs 14,926 at the upper end of the price band for 17 shares. A retail investor can apply for up to 13 lots, or 221 shares, for Rs 1,94,038.

6 Company profile & industry

The company was incorporated as “Kamla Retail Limited” on November 5, 2007. It was India’s largest luxury and premium watch retail player with a 13 percent share of the total sales in premium and luxury segment and a 20 percent share when seen in the exclusive luxury segment in the financial year 2020.

Ethos Limited delivers premium and luxury watches through websites, social media platforms and physical stores. It operates on an omni-channel model and allows customers to order products either offline or online. It also allows them to browse product catalogues and place orders online with doorstep delivery.

The company's watch portfolio has 50 premium brands, including 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.

Its network includes 50 physical retail stores in 17 cities and has 7,000 different premium watches and 30,000 watches in stock at any given time.

In addition to their premium and luxury watch retail, Ethos also undertakes retail of certified pre-owned luxury watches under ‘Certified Pre-Owned’ luxury watch lounge in New Delhi.

The luxury and high luxury watch sales constituted 46.06 percent of the total sales in FY19, 48.09 percent during FY20, 58.00 percent in FY21 and 64.41 percent during the 9-month period ended December 31, 2021.

7 Financials

For FY21, Ethos reported revenue of Rs 386.57 crore as against Rs 457.85 crore a year ago, registering a YoY decline of 15.6 percent. Net profit for the period stood at Rs 5.79 crore versus a loss of Rs 1.33 crore last year. For the nine months ended December 2021, the company generated more revenue than it achieved in whole of FY21. The company recorded revenue of Rs 418.59 crore during the first nine months of FY22 and the net profit for the period jumped to Rs 15.99 crore.

Its net margins for 9MFY22 stood at 3.82 percent as against 1.50 percent in FY21.

8 Strengths and business strategy

The company’s strength lies in its access to a large base of luxury customers and the leadership position it enjoys in the attractive luxury-watch market. Its deep understanding of digital and omnichannel commerce coupled with a strategically located and well-invested store network with an attractive in-store experience provides Ethos a strategic edge over its competitors.

Ethos has strong and long-standing relationships with the world’s leading luxury watchmakers, through which it is able to offer its customers the respected luxury watches brands in the world, the company said in it is documents.

9 Promoters & key management personnel

Mahen Distribution Ltd and Yashovardhan Saboo are the promoters of the company. They hold 14,790,121 equity shares, representing 77.52 percent of the issued, subscribed and paid-up equity share capital.

Saboo is the managing director of the company since incorporation and Pranav Shankar Saboo is the CEO.

Ritesh Kumar Agrawal is the chief financial officer and Anil Kumar the company secretary and compliance officer.

10 Grey market, allotment and listing dates

The company’s shares are not commanding premium in the grey market, according to IPO Watch and IPO Central, both of which track the grey market movements.

Shares will be allotted to successful bidders on May 25 and the refund will be credited in the accounts of unsuccessful bidders on May 26. Shares will be credited to the demat account of the successful bidders by May 27 and the stock will debut on the bourses on May 30.