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We reiterate BUY on Ethos, while raising TP by ~6% to Rs3,400 (28x Sep-28E EBITDA) from Rs3,200, led by rollover to Sep-28E earnings. Ethos continues to see strong growth in Swiss exports to India, along with healthy growth outperformance (vs other consumer peers) and strong rebound in 1Q PAT growth, after a muted FY26. India is emerging as a key luxury consumption market, as it has moved up to rank 15 in CY26TD (vs 20 in CY25) in terms of Swiss watch exports globally. Our analysis of global Swiss watch exports suggests that the Indian market has outperformed significantly, with ~30% growth in 7MCY26 (vs ~1% growth in global Swiss exports). The global luxury industry is also giving rightful attention to India, as Ethos is preparing to host the GPHG Exhibition 2026—the most popular annual watch exhibition in the world—in India (Sep-26-end). While Ethos has consistently outperformed the overall Indian consumption basket (~28% CAGR over FY23-H1CY26), its profitability was impacted in FY26 due to adverse CHF-INR movement and accelerated growth investments toward flagship watch destinations (City of Times/Mall of Asia). However, we believe PAT growth should rebound strongly in FY27E, as CHF-INR trends have been relatively stable in CY26TD and growth investments are now in the base (starting 2QFY27). Ethos’s healthy balance sheet (Rs7.6bn net cash at FY26-end; ~85% of invested capital) also provides headroom to sustain new watch expansion and help ramp up the luxury lifestyle vertical/Favre Leuba.

India leads global Swiss watch export growth; duty cuts to aid margins

India is on the cusp of a luxury segment explosion, with accelerated growth in HNWIs and growing per-capita ownership of luxury watches. With Swiss exports (in CHF terms) clocking ~17% CAGR over CY21-25, India has outperformed global trends, and is gradually gaining incremental mindshare of global brands. Ethos’s ‘ahead of the curve’ investments in people and luxury real estate and a strengthened balance sheet are driving growth outperformance and market-share gains. Also, margins have tangible tailwinds in terms of gradual elimination of customs duty (~600bps duty cut already implemented) and ramp-up of recent luxury locations (Mall of Asia/City of Times). In addition to new watch retail, the Lifestyle segment is gaining focus and has exponential growth prospects, with strong initial traction for Rimowa/Messika.

Network expansion and strategic partnerships to aid double-digit growth

We maintain our positive stance on Ethos. The company, after a near-flat PAT growth in FY26, delivered best-in-class PAT growth of ~48% yoy in 1QFY27, with strong topline growth of 33%. It remains focused on expanding its store network (store count: 103; up ~40% vs FY25), deepening its presence in tier-1 cities (entered 8 new cities recently – Ranchi, Jodhpur, Srinagar, Kanpur, Agra, Faridabad, Visakhapatnam, and Amritsar), building deeper partnerships with global brands (64 exclusive brands vs 40 in FY23), and scaling up its pre-owned segment. We expect Ethos to deliver ~26% revenue CAGR over FY26-29E and faster EBITDA/PAT expansion at ~36%/34%, respectively.

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