The Initial Public Offering (IPO) of Chandigarh-based Ethos Limited ("Company"), one of country's largest luxury and premium watch retail player with 13% share of the total retail sales in premium and luxury segment and a share of 20% in exclusively luxury segment in the financial year 2020, received bids of 10,71,000 shares against the offered 39,79,957 equity shares, at a price band of ₹836-878, according to the data available on the stock exchanges. Overall the issue was subscribed 0.27 times on the first day of bidding.
Retail investors showed interest in the IPO as the portion set aside for them was subscribed 0.53 times. The reserved portion of non-institutional investors witnessed a subscription of 0.04 times. Qualified institutional investors are yet to submit their bids. The issue kicked off for subscription on Wednesday, May 18 and will be open till Friday, May 20.
Analysts from Nirmal Bang and Hem Securities feel that Ethos Ltd is a perfect candidate for long term investment due to its market dominance in terms of no of stores, strategic locations & brand portfolio, long standing relationship with luxury watch brands and access to a large luxury customer base.
Going forward, growth is expected to be derived from store expansion (13 new stores over 50 existing in next three years), entry into leveraging other luxury segments (luggage, jewellery) leveraging its leadership position of luxury watch market and scaling its pre-owned luxury watches, a segment which is still miniscule in the country and were the company enjoys a first mover advantage.
Pre IPO, the company did a Placement to Sunil Singhania led Abakkus which invested Rs 25 at Rs 826 per share via its Growth Fund 2, a SEBI registered Category III AIF. On Tuesday, Ethos Limited raised Rs 141.68 crore from 9 anchor investors i.e ICICI Prudential FlexiCap Fund, Jupiter India fund, Saint Capital Fund, Cohesion MK Best Ideas Sub-Trust, Jupiter South Asia Investment Company Limited- South Asia Access Fund, Coeus Global Opportunities Fund, Alchemy Leaders of Tomorrow-Closed ended fund Series 2, UPS Group Trust, Nomura Singapore Limited ODI, who were allotted 15,22,186 equity shares at the upper price band of Rs 878 per share.
Emkay Global Financial Services Limited and InCred Capital Wealth Portfolio Managers Private Limited are the Book Running Lead Managers and KFin Technologies Private Limited is the registrar to the Issue. The equity shares of the company are proposed to be listed on BSE and NSE.
Ethos has a sizeable portfolio of premium and luxury watches in India and retail to 50 premium and luxury watch brands like Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Bvlgari, H. Moser & Cie, Rado, Longines, Baume & Mercier, Oris SA, Corum, Carl F. Bucherer, Tissot, Raymond Weil, Louis Moinet and Balmain. It.
The IPO consists of a fresh issue of equity shares aggregating to Rs 375 crore and an offer for sale (OFS) of up to 1,108,037 equity shares. The proceeds from its fresh issuance worth Rs. 29.89 crores will be utilised for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company, Rs 236.75 crore for funding working capital requirements, Rs 33.27 crore for financing established of new stores, Rs 1.98 core for financing upgradation of ERP and general corporate purposes.