India is on the verge of experiencing a significant surge in demand for luxury goods. Projections suggest that the luxury market in India could grow fivefold over the next decade, driven by a burgeoning population of affluent individuals with increasing disposable incomes and aspirations.

In recent times, sales of luxury items across various sectors such as luxury automobiles (increased threefold), high-end real estate (doubled), and premium clothing have reached record levels.

Furthermore, the demand for luxury goods is no longer confined to metropolitan areas but has also spread to Tier 2 and Tier 3 cities. This presents an unparalleled opportunity for retailers specializing in premium and luxury products like Ethos.

Ace Investor’s Bet

Ethos, a luxury watch retailer, made its debut on the stock exchange on May 30, 2022, with an initial public offering (IPO) that raised Rs 472.29 crore by selling shares at Rs 878 each.

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Experienced investors Mukul Mahavir Agrawal and Sunil Singhania from Dalal Street retained their holdings in Ethos Ltd during the December 2023 quarter.

The company has generated significant returns for investors since its stock market debut, marking a successful trajectory. The stock has surged 242 percent since its debut. Over the past year, the stock soared a whopping 160 percent.

Nevertheless, both Mukul Agrawal and Sunil Singhania acquired shares in the company prior to its initial public offering (IPO), increasing their stake when the company listed on the stock exchange.

As of December 31, 2023, Mukul Mahavir Agrawal possessed 640,000 equity shares in the company, maintaining the identical number of equity shares as of September 30, 2023. Similarly, Sunil Singhania’s Abakkus Growth Fund-II retained its ownership of 302,663 equity shares of the company during the December 2023 quarter.

So, should you own this stock as well? Well, let’s find out!

Corporate Overview Of Ethos

Established in 2003, Ethos Ltd stands as one of India’s leading retailers specializing in luxury and premium watches. With a significant presence in the market, it commands a 20% share in the luxury segment and a 13% share in the premium watch segment.

Operating as a subsidiary of KDDL, Ethos has established itself across 23 cities in India, boasting over 60 stores. In addition to its brick-and-mortar locations, the company has embraced an omnichannel approach, leveraging its websites and social media platforms to reach customers.

Ethos caters to a diverse range of clientele, offering products from over 60 premium and luxury watch brands, including 46 exclusive brands solely available through Ethos. Its extensive portfolio comprises more than 7,000 SKUs, encompassing premium, bridge-to-luxury, luxury, and high-luxury watches.

Ethos boasts an impressive lineup of renowned brands such as Rolex, Breitling, Omega, Frederique Constant, Jacob & Co, Ulyssse Nardin, among others. Notably, in May 2023, Ethos expanded its portfolio by acquiring a 100% stake in the 280-year-old brand “Favre Leuba” through its wholly-owned subsidiary, Silvercity Brands AG.

Ethos has positioned itself as a leader in the Certified Pre-Owned (CPO) luxury watch market. Through this segment, the company offers a comprehensive service of buying and selling pre-owned luxury watches, ensuring each timepiece undergoes a thorough 360-degree inspection and verification process, accompanied by a certified two-year warranty.

In its pursuit of diversification into other luxury categories, Ethos has inked partnership agreements with Messika, Bvlgari, and Rimowa. These collaborations enable Ethos to retail high-end jewelry from Messika & Bvlgari and luxury travel accessories from Rimowa in the Indian market.

Financials Of Ethos

Revenue (in ₹crore)788.53577.28386.57457.85
Net Profit (in ₹crore)60.323.394.76-1.33

In the fiscal year 2023, Ethos Ltd saw a substantial increase in revenue, surging by 37% to reach ₹788.53 crore as opposed to ₹577.28 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a robust Compound Annual Growth Rate (CAGR) of 20% in revenue.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 158% increase from ₹23.39 crore in FY2022 to ₹60.3 crore in FY2023.

In FY23, Ethos Ltd maintained favourable financial metrics with a Return on  Equity (ROE) of 13.97% and Return on Capital Employed (ROCE) of 17.55%.

Future Plans Of Ethos

Certified Pre-Owned (CPO) Segment: A Next Growth Driver

In 2019, Ethos ventured into the Certified Pre-Owned (CPO) sector, gaining an early foothold in the organized CPO market, which is predominantly unstructured in India.

In the fiscal year 2023, Ethos experienced significant revenue growth amounting to Rs 50 crore, accounting for 6% of its total sales. This notable increase represented a remarkable year-on-year surge of 61%, achieving an impressive Compound Annual Growth Rate (CAGR) of 127% over the period from FY20 to FY23. 

The company foresees robust growth prospects for its CPO segment in the fiscal year 2024, driven by sustained demand for pre-owned luxury watches. Ethos conducts CPO watch sales through its website and operates a dedicated CPO luxury watch lounge in New Delhi. 

While management notes that this business doesn’t require many stores to operate hence planning to add miniscule stores, it will be opening the next store in Mumbai and an additional 1-2 stores in other metro cities in the coming years.

While retailing pre-owned watches carries lower gross margins of 20-25% compared to over 30% in new watches, it requires lower capital expenditure (Capex) and has a shorter working capital cycle of 55-60 days, as opposed to 140-150 days for new watches. Consequently, it boasts a higher return profile (ROCE) of over 20%, surpassing the 15-18% range for new watches.

Driving Premiumisation

In Q2FY24, Ethos recorded a Same-store sales growth (SSSG) of 23%, maintaining a strong momentum (~24% in H1FY24) compared to 30% in H1FY23. Despite the overall slowdown in the retail industry, Ethos’ performance remains robust, with much of the growth attributed to an increase in the Average Selling Price (ASP), currently standing at Rs 1,87,500.

In a strategic move made a few years ago, the company shifted focus away from watches priced below Rs 50,000 and instead concentrated on those priced above Rs 50,000. This decision was driven by higher competition in the lower price segment. As a result of this strategy, the ASP witnessed a notable increase, growing 2.2 times from Rs 84,200 in FY20 to Rs 1,87,500 in H1FY24, reflecting a realization growth of 22% CAGR.

The rise in ASP has also contributed to an expansion in gross margins, which improved by 210 basis points from 28.1% in FY20 to 31% in FY23. Consequently, the company’s Return on Capital Employed (ROCE) saw improvement, rising from 10% in FY20 to 17% in FY23, attributed to Ethos’ premiumization strategy.


In conclusion, Ethos’ strategic focus on premiumization, expansion into the Certified Pre-Owned watch segment, and diversification into other luxury categories position the company for robust growth. As affluence and aspirations surge in India, what are your thoughts on the future potential of the luxury market and Ethos’ prospects within it?

Written by Nalin Suriya

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