Emkay Global Assigns Buy Recommendation to Ethos with Target Price of Rs 3200
Ethos Research Report
Summary We reiterate our BUY recommendation on Ethos, driven by the company's 'ahead-of-the-curve' investments in people, luxury real estate, and a strengthened balance sheet of Rs8 billion in cash.
Growth Prospects Ethos expects minimal disruption from the ongoing war in the Middle East, with robust growth trends and no major supply chain disruption. The company also benefits from tangible tailwinds in terms of gradual elimination of customs duty, lower discounting, and ramp-up of recent luxury locations. 100 boutiques are expected to be opened over the next 3-4 years, with 75-80% of the targeted expansion driven by non-metro stores.
Product Performance Favre Leuba has seen a better-than-expected launch, with approximately 6,000 pieces sold in the first year at an average selling price of Rs350,000. The lifestyle segment is also seeing strong initial traction for Rimowa and Messika.
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Valuations Ethos's valuations at 40x/30x FY27E/FY28E EPS are attractive, given strong ~30% earnings CAGR over FY26-28E. We reiterate our BUY recommendation with a target price of Rs3,200 (30x Dec-27E EBITDA).
Investor Takeaway
Investors should consider buying Ethos due to its 10x scale-up opportunity over the next decade.
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