Ethos IPO: Ethos Ltd, the largest player in the country’s luxury and premium watch retailing business, has reached its final day of public offering (IPO) opened by the company. From Day 2, the Ethos IPO had received a mediocre response, with the issue getting a 44 percent overall. Ethos IPO looks set to collect Rs 472.29 crore through its public issuance. Of this, Rs 375 crore would be raised through new issuance while Rs 97.29 crore would be raised through offer for sale (OFS), the company has said. The price range of the Ethos IPO is set at Rs 836 to Rs 878 per share of the share.
Ethos IPO: Subscription Status
At 5 p.m. on May 19, which is the market’s day 2 closing time, the Ethos IPO had a consolidated subscription rate of 44 percent, mainly on the backing of individual retail buyers, according to NSE data. The individual retail class was up 68 percent as bidders booked 13,24,181 shares against the 19,57,789 reserved for the class. Non-institutional investors booked 2,08,624 shares, or 25 percent of the 8,39,053 shares reserved for them, while qualified institutional buyers bid for only 19 percent of their allotted share.
Ethos IPO Key Data
The Ethos IPO opens May 18 and closes May 20, Friday. The allotment of Ethos IPO shares is likely to take place on May 25, Wednesday. Refunds will be issued on May 26 to losing bidders, while credits to demat accounts for winning bidders will be issued on May 27, next Friday. The IPO of Ethos is provisionally May 30.
Ethos IPO GMP today
Following the lukewarm response from Ethos IPO, the company’s shares traded at a discount on the gray market today. The Ethos IPO GMP was minus Rs 10 today, according to IPO Watch. Ethos IPO GMP today is minus Rs 10 meaning the gray market expects the Ethos IPO quote to be around Rs 868 (Rs 878 – Rs 10) per share share. However, according to market analysts, the gray market is not the most reliable place when it comes to making investment decisions and one should always check the company’s financial records before investing in an issue.
Ethos IPO: Should You Subscribe?
ICICI securities | Prevent
Over the past five years, revenues in FY17-22 have grown at a moderate pace of ~11% CAGR (9MFY22 annual revenue). The company has clocked average PAT margins of 2-2.5% (except for 9MFY22 where the company has higher PAT margins of 3.8%). Despite Ethos pursuing a low-asset business model, higher capital blocks in inventory (stock days: 170+) and lower margins have translated into corporate reporting of single digit RoE (~7-8%). At the higher end of the price range, Ethos is valued at ~95x P/E yoy for FY22E. Continued improvement in profitable growth and improvement in yield ratios would be important control points.
We award the AVOID rating to Ethos IPO and await consistency in the improvement in earnings metrics the company has shown in recent quarters.
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