Ethos IPO GMP Today, Subscription Status, Valuation; Should You Invest on Last Day?

Ethos IPO: Ethos Ltd, the country’s largest retailer of luxury and luxury watches, has reached its final day of an initial public offering (IPO) that the company opened. As of the second day, the Ethos IPO had received a moderate response, with the issue taking a total of 44 percent. The Ethos IPO is looking to earn Rs 472.29 crore with its public offering. Of this, Rs 375 crore will come through new issues while Rs 97.29 crore will be raised via Offer for Sale (OFS), the company said. The price range of the Ethos IPO is set at Rs 836 to Rs 878 per share.

Ethos IPO: Subscription Status

As of May 19 at 5 p.m., the time the market closed for a second day, the Ethos IPO had a consolidated subscription rate of 44 percent, primarily with support from individual retail buyers, according to NSE data. The individual category was oversubscribed by 68 percent, as exhibitors booked 13,24,181 shares against 19,57,789 reserved for the category. Non-institutional investors booked 2,08,624 shares, or 25% of their 8,39,053 shares, while eligible institutional buyers took only 19% of their portion.

Key dates for the Ethos IPO

The Ethos IPO opened on May 18, and will close on May 20, Friday. The Ethos IPO shares will likely be allotted on May 25, Wednesday. Refunds to losing bidders will be issued on May 26, while credits to demo accounts for winning bidders will be issued on May 27, next Friday. The listing date for the Ethos IPO is tentatively May 30th.

Ethos IPO GMP Today

After a tepid response to Ethos’ IPO, the company’s shares were listed at a discount on the gray market today. Today’s Ethos IPO GMP was minus 10 rupees, according to IPO Watch. Today’s Ethos IPO GMP is minus Rs 10, which means the gray market expects the Ethos IPO listing to be around Rs 868 (Rs 878 – Rs 10) per share of stock. However, according to market analysts, the gray market is not the most reliable place when it comes to making investment decisions and one should always check the company’s financial statements before investing in any issue.

Ethos IPO: Should you sign up?

ICICI Securities | Avoids

Over the past five years, revenue has grown at a moderate pace ~11% compound annual growth rate in fiscal year 2017-22 (9-month sales of fiscal year 22). The company reported average PAT margins of 2-2.5% (excluding 9 months of FY22 where the company reported higher PAT margins of 3.8%). Although Ethos has followed an asset-light business model, higher inventory blockages (inventory days: 170+) and lower margins shifted the company’s reporting of return on equity (around 7-8%). At the higher end of the price range, Ethos is valued at about 95x P/E on a FY 22E YoY basis. Continuous improvement in profitable growth and improvement of yield ratios will be key elements to monitor, moving forward.

We have assigned an AVOID rating to Ethos IPO and await consistency in improving the profit metrics the company has shown in recent quarters.

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