Financially Strong Stock to Buy Now for Potential 57% Upside; Do You Own It?

SYNOPSIS: Emkay Global Financial Services maintains a “buy” rating on this luxury and premium watch retail player, citing attractive valuations and ~30 percent earnings CAGR, with a Rs. 3,200 target based on 30x Dec-27E EBITDA.

During Wednesday’s trading session, shares of India’s largest luxury and premium watch retail player surged nearly 9 percent on BSE, after brokerage firm Emkay Global Financial Services recommended a “buy” rating with a potential upside of 57 percent on the back of ~30 percent earnings CAGR over FY26-28E, Rs. 800 crore cash buffer and more.

With a market cap of Rs. 5,819.5 crores, shares of Ethos Limited were closed in the green at Rs. 2,174.9 on BSE, up by around 7 percent, compared to its previous closing price of Rs. 2,038.55. The stock has delivered negative returns of over 12 percent in the last one year, and has fallen by around 14 percent in one month.

Brokerage Target & Outlook

Emkay Global Financial Services Limited recommended a ‘buy’ rating on Ethos Limited with a target price of Rs. 3,200 per share, based on 30x Dec-27E EBITDA, representing a potential upside of around 57 percent from its previous closing price. It considers Ethos’s valuations of 40x/30x FY27E/FY28E EPS to be attractive, supported by a strong earnings CAGR of around 30 percent over FY26-28E.

Following its investor summit, Emkay expressed renewed confidence in Ethos’s long-term growth potential, highlighting a 10x scale-up opportunity over the next decade. The brokerage believes that the company’s proactive investments in human capital, premium retail real estate, and a strengthened balance sheet, supported by a cash position of around Rs. 800 crore, position it well for sustained long-term growth.

Emkay noted that Ethos anticipates minimal disruption from the ongoing geopolitical tensions in the Middle East, with continued robust demand trends and no significant supply chain challenges. The brokerage also highlighted structural margin tailwinds, including the gradual reduction in customs duties, lower discounting intensity, and the ramp-up of newly launched luxury stores such as Mall of Asia and City of Time. However, near-term margins may remain under pressure due to the depreciation of the CHF against the INR.

The company’s expansion pipeline remains strong, with plans to open around 100 boutiques over the next 3-4 years. Growth in non-metro markets is progressing as expected and is projected to contribute 75-80 percent of the planned expansion. Additionally, the Favre Leuba brand has delivered a stronger-than-expected performance, with approximately 6,000 units sold in its first year at an average selling price of around Rs. 3.5 lakh. The lifestyle segment is also witnessing encouraging traction, particularly for brands such as Rimowa and Messika.

According to Emkay, the company’s valuation is expected to moderate over the coming years. The stock was trading at a P/E of 60x for FY24, which declined to 51.9x in FY25. Despite a slight uptick to 52.6x in FY26E, the valuation is estimated to ease further to 40.4x in FY27E and eventually to 30.0x by FY28E, indicating improving earnings visibility and a gradual normalisation in valuation multiples over the medium term.

Financial Performance & More

Ethos Limited, India’s largest chain of luxury watch boutiques, is primarily engaged in the business of retail trading of premium and luxury watches, accessories and other luxury items and rendering of related after-sales services. The company caters to a wide price spectrum within the luxury segment, with watches ranging from around Rs. 13,000 to as high as Rs. 8 crore.

For the quarter, Ethos posted a revenue from operations of Rs. 469 crores, reflecting a sequential growth of over 22 percent QoQ compared to Rs. 383 crores in Q2 FY26. Likewise, on a year-on-year basis, revenue grew by nearly 27 percent from Rs. 370 crores recorded in Q3 FY25.

Net profit for the quarter stood at Rs. 31 crores, reflecting a sequential increase of more than 29 percent compared to Rs. 24 crores in Q2 FY26, as well as a rise of around 7 percent YoY from Rs. 29 crores in Q3 FY25.

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