The Ethos IPO, which received bids for 41.38 lakh shares against 39.79 shares offered, resulting in 1.04x subscription, is currently discounted on the gray market, pointing to a lackluster quote on Monday. The gray market premium (GMP) of the luxury and high-end watch retailer stands at minus Rs 5. The IPO price range has been set at Rs 836-Rs 878 per share.
Ethos IPO GMP
According to ipowatch.com, Ethos shares are currently trading at a discount of Rs 5 in the gray market, on the upper band of Rs 878. This means that shares in the gray market are trading at Rs 873 each. This indicates that the listing price of the company’s shares, from now on, should be lower than the issue price. The premium fluctuates based on sentiment in the markets. The listing of the shares on the stock exchange will take place on Monday.
IPO of Ethos: expert opinion
GCL Securities Vice Chairman Ravi Singhal said, “Ethos Limited shares could have a positive quote on Monday and in the bearish case, it could be around Rs 885 to Rs 900, while in the bulls, shares of Ethos could list around Rs 920. to Rs 930 each.
Ravi Singh, vice president and head (research) of Share India, said Ethos’ issue price seemed high compared to the company’s performance over the past year. Market conditions and prevailing valuations suggest the IPO could be listed around the issue price or at a minor discount.
“Investors can book positions and wait to return to lower levels for short-term gains or until market sentiment stabilizes. It all depends on what type of stock market open Monday,” he said. -he adds.
ICICI Securities said: “While Ethos follows an asset-light business model, higher capital lock-up in inventory (days of inventory: 170+) and lower margins resulted in reporting ROE at one digit (~7-8%). At the upper end of the price range, Ethos is valued at ~95x P/E on an annualized FY22E basis. Continued improvement in profitable growth and improving yield ratios would be key elements to watch going forward. »
Ethos IPO: basic details
The Rs 472 crore IPO, which was open for public subscription between May 18 and May 20, received bids for 41,38,650 shares against 39,79,957 shares offered, resulting in a subscription of 1, 04 times. The non-institutional investor share received 1.48x subscription, while the Qualified Institutional Buyers (QIB) category was subscribed 1.06x and Retail Individual Investors (RII) 84%.
The company’s Ebitda (earnings before interest, tax, depreciation and amortization) margins ranged from 13% to 2%, while its PAT (earnings after tax) margins ranged from 10% to (-) 0.3% during the 2019-21 financial year. For the first nine months of FY22, revenue was Rs 420 crore and EBITDA margin was 10.9%.
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