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ICRA reaffirms ratings of Ethos at 'A+' with 'stable' outlook

30-May-25 14:22 Hrs IST

ICRA stated that the rating reaffirmation factors in ICRA's expectations that Ethos will continue to maintain a satisfactory financial profile, led by a healthy YoY growth in its revenues and profit margins.

Healthy demand in the luxury watches retail segment in India, increasing average selling prices, as well as the ongoing store network expansion augur well for the company's business prospects and are expected to strengthen the company's market position.

Furthermore, the consistent increase in exclusive brand arrangements and growing traction in the new lifestyle vertical (Rimowa and Messika), along with the international expansion in Dubai will continue to support the company's margin profile.

The company's credit metrics have remained comfortable with benefits accruing from the growing scale amid healthy demand from luxury and high-end luxury segments, regular fund raising and limited external debt on its books. ICRA expects Ethos' credit metrics to remain healthy, led by strong liquidity position and benefits accruing from its retail network expansion.

The rating continues to favourably factor in Ethos' position as the largest organised luxury watch retailer in the country. The ratings are further supported by the expected pick-up in the performance of the parent company, KDDL Limited, over the medium term.

The ratings, however, are constrained by the inherently working-capital intensive nature of the company's business. The company needs to maintain adequate inventory across various watch segments to maintain the brands' standard of displaying products to its customers. Additionally, the company is exposed to forex fluctuation risk, as a substantial portion of its products is imported. Moreover, the company is exposed to competition from domestic players and international markets in the retail segment.

Going forward, its ability to expand its store network while maintaining its margins and credit metrics will continue to remain a key monitorable.

Ethos was incorporated in 2003 and is a material subsidiary of KDDL Limited. The company is involved in retailing luxury watches. It retails nearly 70 premium and luxury watch brands such as Omega, Jaeger LeCoultre, Panerai, Bvlgari, H. Moser & Cie, Rado, Longines, and Tissot. The company runs 73 retail stores across 26cities in India, including cities such as New Delhi, Mumbai, Bengaluru, Hyderabad, Chennai and Kolkata.

The scrip fell 1.70% to currently trade at Rs 2840 on the BSE.