Ethos IPO: The country’s largest luxury and premium watch retail player Ethos Ltd has reached its last day of the initial public offering (IPO) opened by the company. As of Day 2, the Ethos IPO had received moderate response, with the issue getting 44 per cent in total. Ethos IPO looks to garner Rs 472.29 crore through its public issue. Of this, Rs 375 crore would come through fresh issues while Rs 97.29 crore would be raised via offer for sale (OFS), the company has said. The price band of the Ethos IPO has been fixed at Rs 836 to Rs 878 per equity share.
Ethos IPO: Subscription Status
As of May 19, 5pm, that is the market closing time of Day 2, the Ethos IPO had a consolidated subscription rate of 44 per cent, mainly on the backing of retail individual buyers, as per NSE data. The retail individual category was subscribed 68 per cent, as bidders booked 13,24,181 shares against the 19,57,789 reserved for the category. Non institutional investors booked 2,08,624 shares or 25 per cent of the 8,39,053 shares reserved for them while qualified institutional buyers bid for only 19 per cent of the portion allocated for them.
Ethos IPO Key Dates
The Ethos IPO opened on May 18, and will close on May 20, Friday. The share allotment of Ethos IPO is likely to be done on May 25, Wednesday. The refunds will be issued to losing bidders on May 26, while credits to demat accounts for winning bidders will be done on May 27, next Friday. The Ethos IPO listing date is tentatively May 30.
Ethos IPO GMP Today
Following the tepid response of Ethos IPO, the company’s shares were listing at a discount on the grey market today. The Ethos IPO GMP today was minus Rs 10, as per IPO Watch. Ethos IPO GMP today is minus Rs 10, which means the grey market is expecting that Ethos IPO listing would be around Rs 868 ( Rs 878 – Rs 10) per equity share. However, according to market analysts, grey market is not the most reliable place when it comes to making investment decisions and one should always check the company’s financials before investing in an issue.
Ethos IPO: Should You Subscribe?
ICICI Securities | Avoid
Over the last five years, revenues have grown at a moderate pace of ~11% CAGR in FY17-22 (annualising 9MFY22 sales). The company has clocked in average PAT margins of 2-2.5% (except for 9MFY22 wherein the company reported higher PAT margins of 3.8%). Despite Ethos following an asset light business model, higher capital blockage in inventory (Inventory days: 170+) and lower margins have translated into company reporting single digit RoE (~7-8%). At the upper end of the price band, Ethos is valued at ~95x P/E on annualised FY22E basis. Sustained enhancement in profitable growth and improvement in return ratios would be key monitorables, going ahead.
We assign AVOID rating to Ethos IPO and await consistency in improvement in profit metrics that the company has exhibited in recent quarters.