Synopsis: KDDL Ltd, a major premium watch component manufacturer and the principal shareholder of Ethos, has gone beyond borders with the purchase of the Swiss brand Favre Leuba, which further strengthens its base in the watch industry.
In this article, we will understand the business model of this major and the major highlights this company and the firm can deliver a robust revenue growth, which aims to achieve 15-20 percent annual sales growth with EBIT margins of 19-20 percent.
With a market capitalization of Rs 3,129 crore, the shares of KDDL Ltd closed at Rs 2498.05 per share, representing a decline of 25 percent from its 52-week high of Rs 3,350 per share. Over the past five years, the stock has delivered a mutibagger return of 1,499 percent against the NIFTY 50 return of 122 percent.
About the company
KDDL Limited is a top-notch watch components manufacturer that is a major player in the premium watch components industry, producing dials, hands, indexes, appliques, bracelets, and precision-stamped parts. It has 8 manufacturing plants and derives almost 66 percent of its revenue through exports.
Aiming to reinforce its global footprint, the company took over Estima, a Swiss watch hand factory. Its precision stamping business, apart from watch parts, meets the needs of various industries like automotive, electronics, consumer durables, aerospace, defense, and green energy, reflecting the company’s innovation and flexibility. Also, its decorative packaging unit caters to high-end watch and jewelry clients, thus widening its reach along the value chain.
KDDL Limited is engaged in various product divisions. The company’s Packaging Unit focuses on designing and producing ornamental packaging, enhancing the overall value and elegance of the final product. Its Eigen Engineering Unit specializes in manufacturing stamped components and progressive tools, ensuring high-quality precision parts for a wide range of applications. The Estima Unit (Swiss unit) is dedicated to crafting watch hands and dials, combining fine workmanship with technical expertise to meet exacting standards.
The Dials Unit produces high-quality dials and components, blending precision engineering with artistic finishing to satisfy global requirements. Similarly, the Hands Unit focuses on the manufacture of watch hands, delivering exceptional precision and flawless finishing, which is essential for luxury timepieces. Finally, the Bracelet Unit is a state-of-the-art facility that produces watch bracelets, particularly catering to luxury Swiss watches while maintaining world-class quality.
Subsidiary Highlights
KDDL Limited expands its influence in the domains of watches, luxury goods, and precision components through several subsidiaries that support its position in different areas.
KDDL is a major shareholder with a 50.12 percent stake in Ethos Limited that operates a network of stores selling premium and luxury watches. As of the latest details available, ETHOS has 73 retail stores across India, under which 70 premium and luxury watch brands are sold.
Mahen Distribution Limited is in charge of managing luxury lifestyle products and provides human resources services, whereas Pylania SA deals with the trading and manufacturing of watch components. Estima AG is dedicated to the production of high-precision watch hands and dials, and Kamla International Holdings SA is a special-purpose vehicle and holding company. KDDL is also in the premium luxury watch business with the brand Favre Leuba, by way of a 92.63 percent stake in Silvercity Brands.
Financial Highlights
The company’s revenue for Q1 FY26 came in at Rs 465 crore, up by 29 percent from Rs 360 crore in the same quarter last year. Additionally, on a sequential basis, revenue grew by 11 percent from Rs 420 crore in Q4 FY25.
Coming to its profitability, the company reported a net profit growth of 7 percent to Rs 30 crore in Q1 FY26 as compared to Rs 28 crore in Q1 FY25. Additionally, on a QoQ basis, it recorded a decline of 6 percent from Rs 32 crore.
The company has delivered an ROE and ROCE of 11.51 percent and 14.12 percent respectively, and is currently trading at a high P/E of 31.73x as compared to its industry average of 28.51x.
Future Outlook
The company recently secured a 28,000 sf. ft. shed under lease in Bengaluru, and it will be fully operational in the second half of FY26. The company has a current capacity utilisation of 50 percent which it wants to increase to 65 percent by FY26.
Also, the company remained confident as it outlined a future revenue growth of 15-20 percent by FY26, majorly driven by the recovery in the international market. It also expects its EBITDA margins to remain in the range of 19-20 percent in the coming years, along with capex plans of around Rs 35 crore during the period.
The company is very confident of achieving a 15-20 percent revenue growth in FY26, of which one of the leading growth drivers is its recent acquisition of Silvercity Brands AG, which owns Favre Leuba and currently has a 92.63 percent stake in the Swiss watchmaker.
In spite of the occasional fluctuations in the stock, KDDL Ltd is still maintaining its position as a big player in the luxury watch ecosystem. It’s more than 50 percent ownership in Ethos, the largest luxury watch retail chain in India, gives it a strong presence in the retail sector.
Additionally, the acquisition of Favre Leuba is a daring move to take the Swiss watchmaking industry by storm. With these two pillars, KDDL is not only able to keep the growth going but also consolidate its leadership in the domestic as well as the international luxury watch markets.
In conclusion, KDDL is a good stock to be added to your watchlist as it has a promising portfolio that seems to deliver good growth in the future. We have to see if it is able to deliver the topline growth as stated, as it is delivering a good double-digit sales growth over the past few years.
Written by Satyajeet Mukherjee
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