ETHOSLTD - ETHOS LIMITED Share Price

Management provided an optimistic outlook for Ethos Limited during the earnings call held on May 15, 2025. Key highlights include:

1. Revenue Growth: For FY '24-'25, revenue increased by 25.3% year-on-year, totaling INR 1,252 crores.

2. EBITDA Performance: Pre-Ind AS EBITDA rose by 23.5% to INR 161 crores.

3. Profit Before Tax: Profit before tax (pre-Ind AS) was up by 21.3% to INR 141 crores.

4. Boutique Expansion: Ethos inaugurated 14 new boutiques, reaching a total of 73 across 26 cities. Management targets to open over 100 boutiques within the current financial year.

5. City of Time: The recent launch of "City of Time" in Gurgaon, spanning over 22,000 square feet, includes five exclusive brand boutiques. This flagship store is focused on premium positioning and aims for strong top-line growth in the Gurgaon market.

6. Inventory Management: Inventory increased from INR 440 crores on March 31, 2024, to INR 593 crores on March 31, 2025, aligning with the strategic expansions. The new boutiques and investments in the Messika line contributed to this rise.

7. Luxury Jewelry Segment: The opening of the first Messika boutique in New Delhi marks Ethos's entry into the international luxury jewelry segment.

8. Foreign Expansion: The establishment of Ficus Trading LLC in the UAE is exploratory, targeting international markets and services.

9. Long-Term Vision: Management reiterated a goal to grow revenue 10x over the next decade, focusing on expanding the boutique network, enhancing brand visibility, and maximizing customer engagement.

10. Gross Margin Improvement: Gross margins have stabilized at 31%, with expectations for sustained improvements driven by better product mixes and lower discounting.

Overall, the management's forward-looking stance highlights a strong growth trajectory, strategic expansions in both physical and e-commerce domains, and a commitment to maintaining competitive market positioning in the luxury retail space.

Here are the major questions and responses from the Q&A section of the Ethos Limited earnings call transcript:

1. Question: What are the key expectations from the City of Time in terms of top line projections, and how much investment is expected for the new stores? Answer: We anticipate City of Time, located in Gurgaon, to elevate our brand presence significantly. While I won't provide specific revenue projections, we believe it will eventually rank among our top boutiques. In FY '25, we'll invest similarly to our previous boutique openings, focusing on long-term revenue growth. Initially, inventory levels will be elevated as we ramp up operations.

2. Question: What's the status on the EFTA with Switzerland, and when can we expect benefits? Answer: The EFTA agreement should be in effect by year-end. Discussions suggest that benefits, such as reduced tariffs, will begin to flow in post-implementation, which we expect will positively impact our margins.

3. Question: How did the first Rimowa store perform, and what's the plan for future stores? Answer: The Rimowa store has generated approximately INR 20-24 crores in its first year, showing steady growth. We're excited about the ongoing construction of a second boutique and identifying locations for future stores to expand our presence.

4. Question: What are the growth strategies for the lifestyle business, and will you expand partnerships with other brands? Answer: Our lifestyle strategy focuses on understanding premium customers in India. We aim to partner exclusively with brands that align with our values, irrespective of category. We are open to collaborating with multiple brands within the same category, which enhances our portfolio.

5. Question: Can you elaborate on your international expansion strategy and the subsidiary in the UAE? Answer: Our UAE subsidiary is exploratory, focused on assessing opportunities in the pre-owned and high-end retail markets, catering to the significant Indian population there. We aim to enhance aftersales services and understand our international business dynamics better.

6. Question: What is the contribution of exclusive brands to total sales, and what are the volume growth figures? Answer: In Q4, the exclusive brand share stood at over 30%, while overall volume growth for FY '25 was about 15.5% year-on-year. This sustained growth reflects our expanding portfolio and market presence.

7. Question: When can we expect a rebranding for the Ethos network? Answer: We've been working on rebranding for the past six months. We're finalizing a contemporary logo that reflects our luxury positioning and expect to implement it across all platforms by the year-end.

8. Question: Can we see improvements in ROCE, and how do you plan to manage inventory levels? Answer: We aim to boost ROCE through enhanced profit margins and better operational efficiency. While inventory days may remain elevated due to ongoing expansions, we're actively seeking strategies to optimize them, influenced by our learning from international practices.

These responses summarize the main themes and insights from the earnings call, focusing on growth strategy, financial metrics, and future direction.