We remain confident on ETHOS Ltd arriving at target price of Rs3,722
Posted: Wed Aug 20, 2025 8:40 pm
Revenue – Stellar growth driven by strong volume growth: ETHOS reported a topline of Rs3.46Bn, a stellar growth of 27%YoY (2-year CAGR 23%) and 11%QoQ. Topline was better than our estimates by 6%. Blended ASP remained steady at ~Rs213,000; company’s growth was driven by healthy volume growth ~25%+YoY. SSSG stood at robust 17.6%, implying growth from new stores at ~10%+ on YoY basis, reflecting strong traction across all price segments. Total billings for the quarter came in at Rs4.01Bn, a growth of 26%YoY.
Strong traction – Qualitative growth all-round: Online billings (37% of total billings); reported robust growth of 51%YoY to Rs1.48Bn. During the quarter company commenced ~7-new stores, totaling the store count to 80-stores as on Q1FY26, (higher by 27%YoY). Revenue from exclusive brands came in at 28.7% Vs 28.4% in Q1FY25: registering a growth of 28%YoY. Pre-owned watches segment sales increased by 42%YoY to Rs278Mn.
Operating margins – Adverse forex movement led to lower operating margins: Significant volatility in CHF/INR exchange rate dented the profitability of company during the quarter. ETHOS had an adverse impact of Rs57Mn which compressed gross profits by Rs38Mn, and company booked notional exchange loss of Rs19Mn. Excluding the impact of same, operating profit would have been at ~Rs518Mn. EBITDA stood at Rs461Mn, a growth of mere 7%YoY. EBITDA margins came in at 13.3% (margins would have been ~15% without forex impact) as compared to 15.8%/15.3% in Q1FY25/Q4FY25 respectively. Company mentioned that brand partners have taken calibrated price hikes w.e.f. Jul’25 which should cushion the impact of forex movement and aid in margin improvement from hereon.
ANALYST VIEW & INVESTMENT THESIS
1-year View:
We reckon, ETHOS is on a strong growth trajectory and the momentum should sustain for coming fiscal on the back of higher demand for luxury watches, new store opening and onboarding of newer brands. In coming 9MFY26, ETHOS is on-track to open 20-new stores, which should accelerate growth. With major volatility in CHF/INR movement behind and brands taking price hikes to mitigate the risk, margins are expected to improve from coming quarter. Moreover, with SWISS FTA nearing finalization stage, we expect more brands to enter Indian markets and ETHOS will be an ideal retailer for the brands.
3-years View:
ETHOS is expected to continue delivering strong topline growth in the coming years, driven by rising demand for luxury items in India. As one of the largest retailers of luxury watches in the country, ETHOS is well-positioned to benefit from this trend. Incrementally, company has invested in setting up robust store network across key cities which will contribute to higher growth in coming years. Post the recent Rights Issue- company is well capitalized to fuel the upcoming growth & expansion. Hence, we reckon healthy CFO generation from coming fiscal. Company is also targeting other luxury items viz. Bags (RIMOWA) & Jewelry (MESSIKA) which will ramp-up in coming years; (New segments will be operated under ETHOS LIFESTYLE where company has raised ~Rs1.79Bn).
We remain confident on ETHOS Ltd and continue to value the company at P/E(x) of 60x on FY27E EPS of Rs63 (revised downwards by 6%), arriving at target price of Rs3,722. Hence, we retain our BUY rating on the stock.
Strong traction – Qualitative growth all-round: Online billings (37% of total billings); reported robust growth of 51%YoY to Rs1.48Bn. During the quarter company commenced ~7-new stores, totaling the store count to 80-stores as on Q1FY26, (higher by 27%YoY). Revenue from exclusive brands came in at 28.7% Vs 28.4% in Q1FY25: registering a growth of 28%YoY. Pre-owned watches segment sales increased by 42%YoY to Rs278Mn.
Operating margins – Adverse forex movement led to lower operating margins: Significant volatility in CHF/INR exchange rate dented the profitability of company during the quarter. ETHOS had an adverse impact of Rs57Mn which compressed gross profits by Rs38Mn, and company booked notional exchange loss of Rs19Mn. Excluding the impact of same, operating profit would have been at ~Rs518Mn. EBITDA stood at Rs461Mn, a growth of mere 7%YoY. EBITDA margins came in at 13.3% (margins would have been ~15% without forex impact) as compared to 15.8%/15.3% in Q1FY25/Q4FY25 respectively. Company mentioned that brand partners have taken calibrated price hikes w.e.f. Jul’25 which should cushion the impact of forex movement and aid in margin improvement from hereon.
ANALYST VIEW & INVESTMENT THESIS
1-year View:
We reckon, ETHOS is on a strong growth trajectory and the momentum should sustain for coming fiscal on the back of higher demand for luxury watches, new store opening and onboarding of newer brands. In coming 9MFY26, ETHOS is on-track to open 20-new stores, which should accelerate growth. With major volatility in CHF/INR movement behind and brands taking price hikes to mitigate the risk, margins are expected to improve from coming quarter. Moreover, with SWISS FTA nearing finalization stage, we expect more brands to enter Indian markets and ETHOS will be an ideal retailer for the brands.
3-years View:
ETHOS is expected to continue delivering strong topline growth in the coming years, driven by rising demand for luxury items in India. As one of the largest retailers of luxury watches in the country, ETHOS is well-positioned to benefit from this trend. Incrementally, company has invested in setting up robust store network across key cities which will contribute to higher growth in coming years. Post the recent Rights Issue- company is well capitalized to fuel the upcoming growth & expansion. Hence, we reckon healthy CFO generation from coming fiscal. Company is also targeting other luxury items viz. Bags (RIMOWA) & Jewelry (MESSIKA) which will ramp-up in coming years; (New segments will be operated under ETHOS LIFESTYLE where company has raised ~Rs1.79Bn).
We remain confident on ETHOS Ltd and continue to value the company at P/E(x) of 60x on FY27E EPS of Rs63 (revised downwards by 6%), arriving at target price of Rs3,722. Hence, we retain our BUY rating on the stock.