Ethos Ltd — Q4 FY25 earnings call

Call held 15 May 2025

Management summary

Ethos Ltd delivered strong financial results for FY25, with revenue growing 25.3% to INR 1,252 crores and EBITDA increasing 23.5% to INR 161 crores. The company expanded its boutique network by 14 new stores, launched major initiatives like 'City of Time' and the Messika boutique, and saw robust growth in its pre-owned segment. Despite facing delays in some store openings and an increase in inventory due to strategic investments, management remains confident in its long-term growth trajectory and margin improvement.

Highlights

  • Revenue in FY25 increased by 25.3% year-on-year to INR 1,252 crores.

  • EBITDA in FY25 pre-Ind AS increased by 23.5% year-on-year to INR 161 crores.

  • Profit before tax in FY25 pre-Ind AS increased by 21.3% year-on-year to INR 141 crores.

  • Successfully inaugurated 14 new boutiques in FY25, reaching a total of 73 boutiques across 26 cities.

  • The pre-owned segment demonstrated strong traction, growing over 30% year-on-year.

  • Gross margins picked up to 31% in Q4 FY25, with management aiming for long-term increase.

Concerns

  • Several boutique openings were delayed due to unforeseen challenges, including GRAP IV restrictions in Delhi NCR, which disrupted operations for 90 days.

  • Inventory increased from INR 440 crores on March 31, 2024, to INR 593 crores on March 31, 2025, due to strategic expansion and proactive stocking for new store launches.

  • Working capital normalization is expected to take time as new boutiques ramp up revenue, leading to temporarily elevated months of stock.

Key financials

3 periods

Headline

  • Revenue
    ₹1,252 Cr
    YoY +25.3%
  • EBITDA (pre-Ind AS)
    ₹161 Cr
    YoY +23.5%
  • PBT (pre-Ind AS)
    ₹141 Cr
    YoY +21.3%

Q4 FY25

  • Gross Margin
    31%

FY25

  • Overall Volume Growth
    15.5%
  • Average Selling Price Growth
    7.4%

What they filed

Q1 FY27: revenue up 30.3%, net profit up 40.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue297 370 311 346 392 +32%471 +27%403 +30%451 +30%
EBITDA42 55 49 46 48 +14%61 +11%47 −4%59 +28%
Net profit21 30 24 20 23 +10%31 +3%21 −12%28 +40%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Distribution Reach

  • Total Boutiques Distribution Reach · FY26 · High confidence 100+
    Looking ahead, we remain on track to be able to cross 100 boutiques during the current financial year.

    — Pranav Saboo

Volume

  • Pre-owned Segment Growth Volume · FY26 · Medium confidence 30%
    Our pre-owned segment also continues to demonstrate strong traction, growing at over 30% year-on-year. ... But at this point of time, we are maintaining this 30% that we are looking at.

    — Pranav Saboo

Revenue

  • Revenue Growth Revenue · over 10 years · High confidence 10x
    I would like to reiterate our long-term vision, which was stated when we went public to grow our revenue 10x over 10 years.

    — Pranav Saboo

Profitability

  • Gross Margin Profitability · long-term · Low confidence increase
    I think that long-term we want our margins to increase.

    — Pranav Saboo

Working Capital

  • Inventory Days Working Capital · next 2-3 years · Low confidence drive it down
    our intention is to drive it down, yes.

    — Pranav Saboo

Other

  • EFTA Agreement Implementation Other · end of this year (2025) · High confidence effectively in place
    From my understanding, the EFTA agreement will be effectively in place by the end of this year. ... I think the benefit will start flowing in by the end of this year.

    — Pranav Saboo

What to watch in Q1 FY26

Boutique Network Expansion

FY26 (current financial year)
Current 73 boutiques
Target Cross 100 boutiques

Why it matters

Indicates the pace of physical expansion and market reach, crucial for long-term revenue growth.

Looking ahead, we remain on track to be able to cross 100 boutiques during the current financial year.

Risks & concerns

  • Regulatory/Operational Disruption (GRAP IV)

    medium

    Implementation of GRAP IV restrictions in Delhi NCR disrupted operations for 90 days, causing delays in boutique openings.

    Several boutique openings were delayed due to unforeseen challenges, including the implementation of GRAP IV restrictions in Delhi NCR, which disrupted our operations for 90 days in the Delhi region.

    Management acknowledged

  • Working Capital Management / Inventory Buildup

    medium

    Inventory increased to INR 593 crores due to strategic expansion and proactive stocking for new store launches, leading to temporarily elevated months of stock.

    Because of the above reasons, the inventory moved from INR 440 crores on 31st March 2024 to INR593 crores as on 31st March 2025. ... inventory may seem elevated for a while before it reaches the -- the revenue ramp-up rate reaches the steady state of growth or steady state and then growing from there.

    Management acknowledged, temporary due to strategic investments

  • Currency Volatility (CHF INR)

    medium

    Notable fluctuations in the CHF INR exchange rate impact margins, but a hedging strategy covers approximately 50% of foreign currency exposure.

    We have seen notable fluctuations in the CHF INR exchange rate in the past year. We have now implemented a prudent hedging strategy covering approximately 50% of our foreign currency exposure through forward contracts.

    Management acknowledged, implemented hedging strategy

Q&A highlights

8 direct
City of Time (Gurgaon) expectations and growth strategy Direct
Gurgaon is one of the fastest-growing markets in the country. We weren't happy with our presence in Gurgaon, and we didn't have a presence that could help us reach our ambition of firstly, being the largest and the finest retailer and most importantly, setting benchmarks that we can be proud of.

Explains the strategic rationale behind the significant investment in City of Time, highlighting market opportunity and the ambition to establish a flagship luxury retail presence.

Asked by Devanshu Bansal

Working capital normalization and store opening investments Direct
Yes, working capital will normalize over time. There were some changes that we were doing to be able to bring this. And for that, we paid a couple of shipments ahead of time to be able to get better product availability. But yes, that will normalize over time.

Addresses concerns about increased inventory and working capital, attributing it to strategic investments for new store launches and product availability, with an expectation of normalization over time.

Asked by Devanshu Bansal

EFTA agreement with Switzerland and its benefits Direct
From my understanding, the EFTA agreement will be effectively in place by the end of this year. This is from the comments that I've read in the media from the ministers and talking to with our discussions with the Swiss Embassy as well that I think the benefit will start flowing in by the end of this year.

Provides a timeline for a significant trade agreement that could impact import duties and margins for luxury watches, indicating potential future benefits.

Asked by Ankush Agrawal

Rimowa store performance and lifestyle segment expansion Direct
I think that we are roughly about between 20 -- I don't have the exact numbers, but it's about INR 20 crores and INR 24 crores of billing value that was there. And I think it's steadily growing.

Gives a quantitative insight into the performance of a key new lifestyle brand (Rimowa) and confirms management's bullish outlook on the segment's growth and diversification strategy.

Asked by Ankush Agrawal

International expansion strategy (UAE subsidiary) Direct
for us, it is as I said, it's exploratory in nature... We see Dubai as a very large city and a very large market, which has a big infrastructure, but it also has a very large community of Indians that are living there, that travel there.

Clarifies the strategic intent behind establishing Ficus Trading LLC in UAE, focusing on exploring opportunities in the pre-owned market, aftersales service, and potential for Favre Leuba retail.

Asked by Udit

Impact of tariffs/pricing on demand Direct
I don't have any such communication. I haven't seen such communication. In India, we don't see any impact on demand at the moment. April was a very strong month for us.

Reassures investors that current geopolitical tensions and potential tariff changes are not yet impacting demand for luxury watches in India, with April showing strong performance.

Asked by Udit

Broader vision for Ethos (LVMH-like accumulator of luxury products) Direct
I think a big difference between LVMH and Ethos will be that LVMH owns the brand and has retail partners around the world. In our case, do the retail themselves. In our case, we are purely retail partners, and we want to retail products in India.

Clarifies the company's strategic positioning as a luxury retailer and distributor in India, rather than an owner of brands like LVMH, while still aiming for diversification across luxury categories.

Asked by Nitin

Franchising model for expansion Direct
We are at present, we want control over the entire experience. We are not close to the idea of franchising in the future. But at present, we believe that it is very important to be able to control the credibility, the processes and the experience inside the boutique and really be in a very razor-sharp position before we franchise it out.

Explains the company's cautious approach to franchising, prioritizing control over customer experience and brand integrity, while indicating that it is being explored for future expansion.

Asked by Ravi Naredi

3 min read 8 chapters

Detailed narrative

FY25 Financial Performance

Ethos Ltd reported robust financial growth for FY25, with revenue increasing by 25.3% year-on-year to INR 1,252 crores. EBITDA pre-Ind AS grew by 23.5% to INR 161 crores, and Profit Before Tax pre-Ind AS rose by 21.3% to INR 141 crores. The company also noted an overall volume growth of 15.5% and an average selling price growth of 7.4% for the year.

Boutique Network Expansion & Delays

The company successfully inaugurated 14 new boutiques in FY25, bringing the total count to 73 across 26 cities. While the initial target was to open over 20 boutiques, several openings were delayed due to unforeseen challenges, including 90 days of disruption from GRAP IV restrictions in Delhi NCR. However, 8 boutiques initially slated for the last financial year have recently opened, and the company aims to cross 100 boutiques in the current financial year.

City of Time & New Flagship Concepts

Ethos launched 'City of Time' in Gurgaon on May 10th, India's largest horological project spanning over 22,000 square feet. This flagship features five exclusive brand boutiques, two multi-brand galleries, and over 50 independent brands. The strategic choice of Gurgaon is due to its rapid growth, and the project aims to set global benchmarks for luxury retail. Two more exclusive brand boutiques are planned for City of Time in the next quarter.

Lifestyle Segment Expansion & Diversification

Ethos is actively diversifying its luxury portfolio, launching its first Messika boutique in New Delhi on May 14th, marking its entry into the international luxury jewellery segment. Following the success of its first Rimowa boutique (generating INR 20-24 crores in billing value), a second Rimowa boutique is under construction in Delhi, and a third is planned. The company has also signed another American luggage brand, reinforcing its presence in the premium luxury lifestyle category.

Pre-owned Segment & International Foray

The pre-owned segment, branded 'Second Movement,' continues to show strong traction, growing over 30% year-on-year, with customers increasingly trusting the company's processes. As part of international expansion, Ethos established a wholly-owned subsidiary, Ficus Trading LLC, in the UAE. This exploratory step aims to assess opportunities in the pre-owned market, aftersales service, and potential for retailing Favre Leuba in the region.

Inventory Management & Working Capital

Inventory increased from INR 440 crores on March 31, 2024, to INR 593 crores on March 31, 2025. This elevation is attributed to strategic expansion, the addition of 14 new boutiques, and proactive stocking for new store launches. Management expects working capital to normalize over time as new boutiques ramp up revenue, acknowledging that inventory lands on day one while revenue takes time to catch up.

Gross Margin & Currency Hedging

Gross margins picked up to 31% in Q4 FY25. Management believes long-term sustainability is achievable, despite volatility in the CHF INR exchange rate. A prudent hedging strategy covering approximately 50% of foreign currency exposure through forward contracts has been implemented to protect against rupee depreciation while maintaining flexibility for favorable currency movements. The company aims to increase margins long-term through better product mix and lower discounting.

EFTA Agreement & Long-term Vision

The EFTA agreement with Switzerland is expected to be effectively in place by the end of 2025, with benefits flowing in by then. Ethos plans to share gains from this agreement with brands and expects it to facilitate more SOR (Sale or Return) arrangements once duties are lowered. The company reiterated its long-term vision to grow revenue 10x over 10 years, driven by sustained investment in boutique expansion, brand visibility, and deeper customer engagement.

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