Ethos - An Attractive Long Term Bet: HDFC Securities Initiates Coverage

HDFC Securities Retail Research

Ethos Ltd. is India’s largest luxury and premium watch retail player having market share of ~20% in the luxury watch retail segment and ~13% in the premium and luxury watch retail segment in India. In addition to their chain of 50 physical retail stores in 17 cities across India, Ethos offers an omni-channel experience to its customers through website and social media platforms. Its website 'www.ethoswatches.com' is India's largest website for premium and luxury watches in terms of the number of brands and watches offered.

Ethos has a sizeable portfolio of premium and luxury watches in India enabling them to retail ~61 premium and luxury watch brands including Rolex, 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.

Relationships with luxury brands typically take many years to develop and are difficult to replicate.

Ethos’ strong relationships with top luxury brands provide a wide moat for its business.

Club Echo is the loyalty program of Ethos with 2.85 lakh registered members as on March 2022, and annually ~40% business comes from repeat buyers registered with the program.

India’s watch market is likely to grow at 10.6% compound annual growth rate to reach Rs. 22,300 crore by 2025.

On the other hand, premium and luxury segments are growing faster than other segments at a CAGR of 12.9%, driven by faster urbanisation, aspirational lifestyles and growing disposable incomes.

These are long-term tailwinds, which may continue to strengthen the company’s business.

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