Ethos IPO, which has received bids for 41.38 lakh shares as against 39.79 shares on offer translating into 1.04 times subscription, is currently at a discount in the grey market, pointing towards a lacklustre listing on Monday. The luxury and premium watch retailer’s grey market premium (GMP) stands at minus Rs 5. The IPO’s price band was fixed at Rs 836-Rs 878 per equity share.
Ethos IPO GMP
According to ipowatch.com, the shares of Ethos are currently trading at a discount of Rs 5 in the grey market, on the upper band of Rs 878. It means the shares in the grey market are trading at Rs 873 apiece. This indicates that the listing price of the company’s shares, as of now, is expected to be lower than the issue price. The premium gets fluctuated based on the sentiments in the markets. The listing of the shares on stock markets is going to take place on Monday.
Ethos IPO: Experts’ Take
GCL Securities Vice-Chairman Ravi Singhal said, “Shares of Ethos Limited may have a positive listing on Monday and in bear case, it may list around Rs 885 to Rs 900 levels, whereas in bulls case, Ethos’ shares may list around Rs 920 to Rs 930 apiece levels.”
Share India Vice-President and Head (Research) Ravi Singh said Ethos’ issue price seems expensive if compared with the company’s performance in the past year. The prevailing market conditions and valuations suggest that the IPO may list around the issue price or at a minor discount.
“Investors may book their positions and wait to re-enter at lower levels for short-term gains or till the market sentiments stabilise. Much will depend upon the kind of opening the stock market gets on Monday,” he added.
ICICI Securities has said, “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.”
Ethos IPO Details
The Rs 472-crore IPO, which was open for public subscription between May 18 and May 20, got bids for 41,38,650 shares against 39,79,957 shares on offer, translating into 1.04 times subscription. The portion for non-institutional investors received 1.48 times subscription, while the category for qualified institutional buyers (QIBs) got subscribed 1.06 times and retail individual investors (RIIs) 84 per cent.
The company’s Ebitda (earnings before interest, tax, depreciation and amortisation) margins ranged from 13 per cent to 2 per cent, while its PAT (profit after tax) margins ranged from 10 per cent to (-) 0.3 percent over FY19-21. For the first nine months of FY22, revenue was Rs 420 crore and the EBITDA margin came at 10.9 per cent.
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