Ethos IPO: How good is it?

In our previous part of Ethos IPO story, we read about the key details of the IPO. Here we will answer some questions about Ethos and evaluate it on parameters like management, financials, valuations, etc. IPO questions The company/business 1) Are the company's earnings before tax more than Rs 50 crore in the last 12 months? No. The company's earnings before tax were Rs 8.1 crore in FY21. 2) Will Ethos be able to scale up its business? Yes. The company will use a part of the IPO proceeds to open 13 new stores. Moreover, factors like increasing discretionary spending on watches, increasing penetration of smartwatches and the development of omnichannel markets will help the company scale up its business. 3) Does the company have recognisable brands truly valued by its customers? Yes. The brand 'Ethos' is well recognised and trusted by customers. 4) Does Ethos have high repeat customer usage? Yes. The company's loyalty programme, Club Echo, brings in about 35 per cent of annual business from repeat customers. 5) Does the company have a credible moat? No. Though the company is a leader in its industry, it doesn't have any credible moat. 6) Is the company sufficiently robust to major regulatory or geopolitical risks? No. The company is susceptible to changes in import duties on watches. 7) Is the company's business immune to easy replication by new players? No. New players can and have entered the market. 8) Can the company's product withstand being easily substituted or outdated? Yes. Firstly, there are no substitutes