Ethos IPO Day 2 Subscription: The Initial Public Offering (IPO) of Ethos Ltd, one of the largest retailers in the premium and luxury watch industry, is now open for tender. The luxury watch retailer’s public offer opened on May 17 and will remain open for tender until May 20. Ethos IPO aims to raise Rs 472.29 crore from its public offering where Rs 375 crore would come through new issuance while Rs 97.29 crore would be raised through offer for sale (OFS). The public offering is offered at a price range of Rs 836 to Rs 878 per share of shares. Ethos, which houses luxury watch brands such as Rolex, Rado, Longines, Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Fossil and Casio, has raised Rs 142 crore from anchor investors ahead of its IPO.
Ethos IPO: Subscription Status
After day 1 of bidding, Ethos IPO has been subscribed 0.27 times, while the retail portion has been subscribed 0.53 times.
Ethos IPO: target
The watch retailer has proposed to use the net proceeds of its public offering to repay debts, finance its working capital, finance its capital expenditures, etc.
Ethos IPO: Finance
Ethos Ltd reported a total turnover of about Rs 445 crore in FY19 while in FY20 and FY21 the total turnover was Rs 461 crore and Rs 403 crore respectively. In the first 9 months of FY22, Ethos Ltd has reported a total turnover of approximately Rs 429 crore. The profit after tax (PAT) in the period April to December 2021 is about Rs 16 crore, which was about 5.78 crore in FY21.
Ethos IPO: GMP Today
Meanwhile, Ethos shares have made their gray market debut after the first day of bidding. According to market observers, shares of Ethos are available today at a premium of Rs 10 in the gray market. According to the market observers, Ethos IPO GMP today is Rs 10 which means that the gray market expects the Ethos IPO listing to be around Rs 888 (Rs 878 + Rs 10) per share share.
Ethos IPO: Should You Invest?
Astha Jain, Senior Research Analyst at Hem Securities, gives a long-term subscription label to Ethos IPO: “The company is launching the issue at a price range of Rs 836-878 per share at a p/e multiple of 95x after issuance 9 months on an annualized basis computed FY22 eps basis The company is the leading omnichannel retail player for luxury watches in India with access to a large number of luxury customers The company has a leading position in an attractive luxury watch market with an early mover advantage in certified pre-owned companies. In addition, Ethos, a founder-led company, is supported by a professional management team. With strong growth prospects, we believe the company is a candidate for long-term investment, so we recommend “Long Term Subscription” on this issue.
ICICI Securities said in their IPO note, “Over the past five years, revenues have grown at a moderate pace of ~11 percent CAGR in FY17-22 (9MFY22 annual sales). The company has average PAT margins of 2-2 clocked at .5 percent (except for 9MFY22, where the company reported higher PAT margins of 3.8 percent).While Ethos follows a low-asset business model, higher capital blocks in inventory (stock days: 170+) and lower margins have translated into a single-digit RoE business report (~7-8 percent).At the high end of the price range, Ethos is valued at ~95x P/E year-over-year for FY22E. Continued improvement in profitable growth and improvement in yield ratios would be key checkpoints We are awarding the ‘AVOID’ rating and await consistency in the improvement in earnings metrics the company has shown in recent quarters.”
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