Ethos’ Rs 472-crore IPO opened for subscription on Wednesday, and can shut on 20 May. Chandigarh-based Ethos has garnered Rs 141.69 crore from 9 anchor traders forward of its preliminary share sale. The firm knowledgeable the exchanges that it has allotted 16.13 lakh shares at Rs 878 per share on Tuesday, May 17, 2022 to anchor traders. The anchor traders in Ethos’ IPO consists of marquee names akin to ICICI Prudential FlexiCap Fund, Jupiter India fund, Saint Capital Fund, Cohesion MK Best Ideas Sub-Trust, Jupiter South Asia Investment Company Ltd- South Asia Access Fund, Coeus Global Opportunities Fund, Alchemy Leaders of Tomorrow- Closed ended fund Series 2, UPS Group Trust, and Nomura Singapore Limited ODI.
Out of the whole allocation of 16,13,725 fairness shares to the anchor traders, 5,29,601 fairness shares (i.e 32.82% of the whole allocation to anchor traders) had been allotted to at least one home mutual fund by means of a complete of 1 scheme. There are not any listed firms in India that have interaction in a enterprise much like that of Ethos.
Ethos has a sizeable portfolio of premium and luxurious watches in India, enabling it to retail 50 premium and luxurious watch manufacturers like Rolex, Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Bvlgari, Rado, Longines, Tissot. The firm enjoys a market share of 13% within the ‘premium and luxury watch retail’ phase in India.
Should you subscribe to Ethos IPO?
Nirmal Bang has suggested traders to subscribe to Ethos IPO for long-term, whereas ICICI direct has instructed to keep away from this challenge. Nirmal Bang mentioned that he firm is increasing its shops (13 new shops over 50 present in subsequent three years). “With new categories we believe it can grow strongly. We understand that the company is very small as compared to other listed retail players and focused on one category (currently), we believe that there is scope for growth in future,” it mentioned.
Despite Ethos following an asset mild enterprise mannequin, greater capital blockage in stock (Inventory days: 170+) and decrease margins have translated into firm reporting single digit RoE (~7-8%), ICICI Direct mentioned. At the higher finish of the worth band, Ethos is valued at 95x P/E on an annualised FY22E foundation. “Sustained enhancement in profitable growth and improvement in return ratios would be key, monitorable, going ahead,” the analysis agency added.
Analysts at Marwadi Financial Services have really useful subscribing to this challenge however with warning.While Angel One has given ‘neutral’ ranking to it. Analysts at Angel One mentioned that when it comes to valuations, the post-issue TTM P/E works out to 96.2x (on the higher finish of the difficulty value band), which is excessive contemplating firm’s historic top-line & bottom-line destructive CAGR of ~7% and ~24% respectively over FY19-21. “However, Ethos has a healthy market share in total retail sales in the premium and luxury segment. Further Ethos has strong brands and a wide range of products but we believe that these positives are captured in the valuations commanded by the company,” it added.
Marwadi Financial Services has assigned subscribe (with warning) ranking to the IPO as the corporate is a number one luxurious watch omnichannel retail participant in India. “However, the IPO is richly priced and the company will have to continue growing its business at a high growth rate in order to justify its valuation which keeps us cautious from a long term perspective,” it added.
Source: www.financialexpress.com”