Ethos is the largest luxury and premium watch retailer in India. They offer a content-led luxury retail experience through both online and physical stores, featuring 60+ premium & luxury watch brands with over 7,000 watch choices. The company also deals with certified pre-owned luxury watches since 2019. With 56 physical retail stores in 22 cities, Ethos provides an Omnichannel experience through its website and social media platforms. Notably, they have recently partnered with Rimowa for luxury luggage and Messika for luxury jewellery retail in India.

Category of Watches:

Image Source: Ethos Annual Report

Top Luxury watch brands:

Key Growth Drivers for Ethos:

1. Rising demand for luxury products: The Indian luxury market is set to expand by 3.5 times by 2030. Also as India’s per capita income and wealth generation increase, more people will have the means to afford luxury goods. This creates a growing market for luxury retailers like Ethos.
2. Thriving Watch business: The Indian Watch Market is projected to register a CAGR of 20.32% between 2023 – 2028 as per Mordor Intelligence.
3. Aggressive Expansion: Ethos plans to add approximately 40 stores over the next two years, expanding its physical retail presence in strategic locations. This increased store footprint is expected to drive revenue growth and market share gain.
4. Expansion of product range: Ethos is planning to diversify its product range, venturing into other luxury goods such as travel accessories and jewellery. This will not only attract a wider customer base but also increase the company’s sales and revenue.
5. Exclusive partnerships and strong brand relationships: Ethos has a strong partnership with over sixty watch brands, more than 35 of which are exclusively available at Ethos. This gives them a unique competitive advantage and helps to attract customers who are seeking exclusive products.
6. Increasing presence in the Certified Pre-Owned (CPO) market: The company’s foray into the pre-owned luxury watches segment can act as a major growth driver. The CPO market is a significant contributor to the luxury industry globally and Ethos, being the only player in this segment in India, is expected to see strong growth.
7. Omnichannel Retail Strategy: Ethos has successfully implemented an omnichannel approach, integrating both physical and digital shopping experiences. This enables them to remain relevant at all touchpoints of a consumer’s journey, enhancing customer engagement and loyalty.
8. Customer Loyalty Program: Ethos’ customer relationship management initiative, Club Echo, fosters customer loyalty and repeat buying. The program’s success in retaining customers highlights the superior consumer experience provided by the company.
9. Growing middle class population:  Growing middle class will have more discretionary money which they will spend on discretionary and luxury products.  India is also home to the third-highest number of billionaires in the world, with a collective net worth of approximately 675 billion dollars.

Financial performance:

Source: Investor Presentation

10 Year view:

• For Ethos Limited, we see a 25% CAGR growth in EPS in the next 10 years.
• Key reasons include rising demand for luxury goods in India, a thriving watch market, Ethos’ aggressive expansion & diversification of product range, exclusive brand partnerships, growing Indian middle class population, HNIs etc.
• India luxury market is projected and reach $200 billion by the end of 2030 (Bain and Company) and hence we can see a lot of FII inflow into the luxury segment in India. Ethos can capitalize on these factors and grow multifold in the next 10 years.

We estimate the stock to grow by at least 7.7 times or grow by a CAGR of at least 22.57 % in the next 10 years.

Disclaimer: This research is for informational purposes only and does not constitute investment advice. Please do your own due diligence and consult your financial advisor before making any investments.

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