India’s luxury retail sector is witnessing strong momentum, fueled by rising disposable incomes, aspirational consumption, and global brands expanding their presence in the country.
The premium watch and lifestyle segment, in particular, has seen steady growth, with companies focusing on exclusive brand tie-ups, experiential retail, and digital sales channels to capture the high-end consumer base.
Ethos Ltd, with a market capitalization of Rs. 6,487.94 crore, has emerged as a key player in this space. The stock, currently priced at Rs. 2,424.70, has delivered exceptional shareholder value since its June 2022 listing, generating a remarkable 236.35 percent return in just over three years
About the Company
Ethos operates a niche business model centered on retailing luxury and premium watches, along with accessories and other high-end lifestyle products. The company’s offerings are supported by a strong after-sales network and marketing services, making it a one-stop destination for global luxury watch enthusiasts.
With 80 boutiques spread across 26 cities, Ethos has also pioneered experiential luxury through its flagship “City of Time” in Gurugram, an expansive 22,000 sq. ft. destination that houses mono-brand boutiques, multi-brand galleries, watchmaking ateliers, and curated lifestyle spaces.
Operational Highlights
The company delivered strong operating momentum in Q1FY26, opening eight new boutiques and adding three exclusive watch brands, namely Fabergé, D1 Milano, and Unimatic alongside lifestyle brand FPM Milano.
This expansion was complemented by the launch of India’s first exclusive Messika Paris boutique in Delhi, marking the French luxury jewelry brand’s entry into the Indian market.
Total billings for the quarter increased 26 percent year-on-year, while digitally assisted sales surged 51 percent, highlighting the effectiveness of Ethos’ omni-channel model. Same-store sales growth (SSG) improved to 17.6 percent in Q1FY26 from 12.3 percent in Q1FY25.
Average selling price (ASP) stood at Rs. 2.13 lakh during the quarter, while revenue contribution from exclusive brand boutiques edged up to 28.7 percent from 28.4 percent a year ago.
The company’s certified pre-owned (CPO) business also gained traction, recording a 42 percent year-on-year growth in billings. Ethos further strengthened its balance sheet by raising Rs. 409.9 crore through a rights issue and Rs. 179.5 crore via its subsidiary Ethos Lifestyle, to fund expansion and inventory buildup.
However, currency volatility impacted profitability, as CHF/INR fluctuations reduced profit before tax by Rs. 5.7 crore, including Rs. 3.8 crore from margin erosion and Rs. 1.9 crore from notional exchange loss. EBITDA margins were also weighed down by rental costs of new stores still in their early ramp-up phase and higher manpower expenses to support business expansion.
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Financial Snapshot
On a sequential basis, Ethos reported moderate revenue growth but faced margin pressures. Sales rose from Rs. 311 crore in Q4FY25 to Rs. 346 crore in Q1FY26, an increase of 11.3 percent.
Operating profit slipped marginally from Rs. 46 crore to Rs. 45 crore, a decline of 2.2 percent. Profit before tax fell 13.3 percent from Rs. 30 crore to Rs. 26 crore, while net profit dropped 17.4 percent from Rs. 23 crore to Rs. 19 crore.
Compared to the year-ago quarter, the company posted strong revenue growth but lower profitability. Sales surged 26.7 percent year-on-year from Rs. 273 crore to Rs. 346 crore. Operating profit inched up 4.7 percent from Rs. 43 crore to Rs. 45 crore. Profit before tax declined 16.1 percent from Rs. 31 crore to Rs. 26 crore, while net profit fell 17.4 percent from Rs. 23 crore to Rs. 19 crore.
The company also mentioned that if CHF/INR was not volatile, the net profit would be Rs. 23.3 crore, reflecting a moderate gain of 1 percent sequentially and year-on-year.
Industry Outlook and ICRA Insights
According to ICRA, the long-term outlook for the luxury watch retail industry in India remains robust. Rising demand, higher average selling prices, and continued expansion of the store network are expected to bolster Ethos’ market position.
Increasing exclusive brand tie-ups, growth in new lifestyle verticals such as Rimowa and Messika, and international expansion into Dubai are likely to support margin improvement over time.
Ethos’ financial health remains strong, aided by consistent fundraising, limited external debt, and healthy liquidity. ICRA expects the company’s credit metrics to stay comfortable as scale and profitability grow.
However, elevated inventory levels remain a concern, given the large number of store openings in FY25 and FY26. The company is also exposed to foreign exchange volatility, as approximately 40 percent of its watches are imported.
While Ethos hedges about half of its forex exposure through forwards, it continues to face risks from currency fluctuations. Additionally, competition from both domestic and international players in luxury retail requires sustained investments in brand partnerships and store expansion.
Conclusion
Ethos has positioned itself as a frontrunner in India’s luxury retail landscape, combining global brand partnerships, experiential destinations, and a digitally enabled sales model.
While near-term profitability is under pressure due to expansion costs and currency volatility, the long-term growth runway remains intact, supported by rising demand for premium luxury products in India and abroad. With strong shareholder returns since listing and an expanding store footprint, Ethos is steadily making a case as India’s next luxury retail champion.
Written By Manan Gangwar
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