Stock owned by ace investors Sunil Singhania & Mukul Mahavir Agrawal may surge up to 40%: What should investors do?

Sunil Singhania, Mukul Mahavir Agrawal, Ethos Share Price: Ace investors Sunil Singhania and Mukul Mahavir Agrawal-backed luxury watch brand company Ethos Limited has the potential to surge more than 40 per cent on a long-term basis amid a healthy outlook. The stock on Tuesday closed over 1.5 per cent higher to Rs 989.25 apiece on the BSE.

The scrip didn’t see a much larger impact or volatility as the pre-IPO (Initial Public Offer) lock-in period of the Ethos came to an end on November 25, 2022.

Ethos: Ace Investors' Favourite

Renowned investors – Sunil Singhania and Mukul Mahavir Agrawal – have stayed put in Ethos during the September quarter. Singhania through its asset management company, Abakkus Asset Manager LLP, has 3,02,663 equity shares of 1.3 per cent stakes in the company, as per the latest shareholding pattern.

While Agrawal, who publicly holds 52 stocks with a net worth of over Rs 2,781.0 crore, has 9,24,121 equity shares or nearly 4 per cent stakes in the company, as per the BSE shareholding pattern.

Ethos Valuations

Rahul Dani, Research Analyst, Monarch Networth Capital Research, said, “We expect the company to post revenue growth of 28 per cent CAGR over FY22-25E, with 8 per cent growth in realization and a 16 per cent volume growth.”

“We expect the certified pre-owned (CPO) business to post a growth of 75 per cent over the same period while operating margins (OPM) should expand by 430 basis points (bps) year-on-year (YoY) over the same period to 15.9 per cent, led by a 205 bps improvement in gross margins,” Dani said.

The brokerage firm estimates EBITDA to grow at 43 per cent over the same period, and PAT (profit after tax) at a CAGR of 66 per cent. At a CMP (current market price) of Rs 989, the stock is trading at 26x FY24E and 20x FY25E, it said, giving a 'Buy' rating with a target of Rs 1400 — implying 41 per cent upside.

Ethos Share Price History

Ethos shares made a tepid market debut earlier this year in May, it got listed at around 6 per cent discount to Rs 830 and 825 per share on the BSE and NSE, respectively compared to the issue price of Rs 878 per share at the upper end.

The stock is trading over 13 per cent lower from its 52-week high of Rs 1145 per share, touched on August 16, 2022. The stock since listing on May 30, 2022, has jumped almost 24 per cent, while the counter is up over 27 per cent and it has corrected 2.5 per cent in the last one month.

About Ethos

Ethos is one of India’s most prominent luxury retail brands and one of the market leaders for luxury watches in India. Fortified by over two decades of experience, the company manages over 60 watch brands, of which more than 35 are exclusively available at Ethos.

The company has around 48 stores and is constantly on the lookout to add more stores. Its strategy to further diversify its product range will likely make it synonymous with luxury.