Ethos Ltd - Scaling the luxury Flywheel - Company Update

Ethos Ltd reported a robust Q4FY26 performance, with revenue growth ahead of our estimates driven by healthy store expansion and likely low double-digit SSSG. While gross margins remained impacted by adverse currency depreciation, the company witnessed sequential recovery led by a better mix of exclusive brands and early EFTA benefits. Ethos added six stores during the quarter, taking the total network to ~94 stores versus ~79 stores in FY25, and continues to maintain an aggressive expansion strategy with ~four additional stores planned in Q1FY27e. We believe that the combination of rising luxury consumption, deeper penetration across key cities, strong brand partnerships, and accelerated store additions would help sustain growth momentum, while margin recovery could gradually follow with currency stabilization and higher EFTA-led benefits. We largely maintain our earnings estimates and retain our positive view with a TP of Rs 2,800 (vs Rs 2,850 earlier), based on 40x FY28E EPS.

Strong Revenue Momentum:

Ethos Ltd reported robust revenue growth of 33% YoY to Rs 4,140mn (MNCL Est. Rs 3,829mn), driven by robust store expansion and healthy same-store sales growth. The company added six new stores during the quarter, taking the total store count to ~94 stores compared to ~79 stores in FY25, reflecting continued momentum in network expansion and sustained traction in premium luxury consumption.

Margins Impacted by Currency Headwinds & Expansion Investments

Gross margins contracted 170bps YoY to 29.3%, impacted by adverse currency movements, although margins improved sequentially by 39bps QoQ. EBITDA grew 7.8% YoY to Rs 513mn (MNCL Est. Rs 493mn), driven by healthy revenue growth, but was partially offset by lower gross profit and increase in operational expenses. EBITDA margins contracted by 289bps YoY to 12.4% (MNCL Est. 12.9%) due to lower GM and 40/80bps increase in employee/other expenses.  PAT came in at Rs 228mn flat YoY (MNCL Est. Rs 201mn) led by higher deprecation charge (+46% YoY).

Outlook:

We continue to remain positive on Ethos Ltd, supported by its aggressive network expansion, rising premiumisation in the luxury watch segment, and strengthening brand portfolio. The company entered six new markets in FY26 — Ranchi, Jodhpur, Srinagar, Kanpur, Agra, and Faridabad — taking its presence across 32 cities, while continuing to deepen relationships with global luxury brands through four new exclusive partnerships signed during the year. Despite elevated employee, rental, and marketing expenses owing to investments towards new boutiques and emerging business segments, we believe these costs are largely growth-oriented in nature and should normalize with store maturity and operating leverage kicking in. Further, healthy SSSG of 14.2% in FY26, growth in the certified pre-owned (CPO) business (+22.9% YoY), and an improving mix towards luxury and high-luxury watches (71% mix in FY26 vs 70% in FY25) provide strong confidence on sustained growth momentum going forward. We expect margin recovery to gradually follow with better scale, improved product mix, currency stabilization, and incremental EFTA-led benefits.

Valuation, view and Risk:

Though Q4 performance as ahead of our estimates, we have lowered our FY27/28E eps estimates to factor in depreciation in INR vs CHF and anticipated increase in deprecation due to store additions. We forecast Revenue/EBITDA/PAT CAGR of 26/34%/32% over FY26–FY28E.  We believe the stock should continue to see robust growth with store expansion in and healthy SSSG growth. We value the stock at 40x FY28E EPS of Rs 62 post which we arrive at our TP of Rs 2,800 (vs Rs 2,850 earlier) Key risks: Delay in store expansion, further depreciation of INR and lower consumer sentiments.

Company website: https://www.ethoswatches.com/

*CMP is as per report published date

Click to download the full Ethos Ltd. Q4FY26 Company Update

Analyst: 

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Vaidik Bafna - Research Associate, Institutional Equities (NISM-202100035711)

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FAQs on Ethos Ltd. Q4FY26 Report

What drove Ethos Ltd’s Q4FY26 growth?

Growth was driven by strong same-store sales, rising luxury watch demand, premium brand partnerships, and expansion of the retail store network across multiple cities.

Why are analysts positive on Ethos Ltd?

Analysts remain optimistic due to strong luxury consumption trends, healthy store expansion, premiumization in watches, and long-term operating leverage benefits.

What is the target price for Ethos Ltd shares?

Analysts maintain a BUY rating on Ethos Ltd with a target price of Rs 2,800, supported by strong earnings growth and expansion visibility.

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