Sales up 28%, profits flat: Is Ethos Ltd growing too fast?

Figure 1: Stock Price Movement of Ethos Ltd. Source: Screener.in

What the numbers really say

In Q2 FY26, Ethos reported a revenue of Rs 383.4 crore, up from Rs 297.1 crore a year ago. This 29% growth was mirrored across both new and existing stores. Same-store sales rose by 16.5%, a sign that demand is not just growing from expansion but from within the core business. Pre-owned watches, sold under the Second Movement platform, added another layer of strength, posting a 25% increase in billing.

Average selling prices are creeping higher too, with the ticket size crossing Rs 2.18 lakh, a reflection of Ethos’s push toward higher-end timepieces and affluent customers. Around 72% of watch revenue now comes from the luxury and high-luxury segments. That is up from 70% last year and 66% the year before. It is not just a business getting bigger. It is a business getting more premium.

Yet, profit is not keeping pace. EBITDA for H1 FY26 rose just 7.8%, while PAT came in almost flat at Rs 42.3 crore.

A weaker rupee has played spoiler, especially against the Swiss franc, where depreciation hit 15% over six months. Ethos says this alone knocked off Rs 10.7 crore from gross margins through higher input costs and notional losses on foreign currency liabilities. There was also a drag from newly opened boutiques. Most are still ramping up and carry higher fixed costs early in their lifecycle.

Margins tell the full story.

Consolidated EBITDA margins dropped to 10.4% in H1 FY26 from 12.5% a year earlier. PAT margins slipped below 6%. These are not collapse-level numbers, but they do signal a transition phase where scale is being built, but profitability is temporarily being stretched.

Growth, store by store

If Ethos’s margin story is about strain, its expansion story is about ambition. In the first six months of FY26 alone, the company launched 16 new boutiques, a major leap from the 73 it had at the end of March.

These openings include flagship outlets for global brands like Messika and Rimowa, the latter now with a second store in New Delhi. Ethos has taken its total footprint to 86 stores across 26 cities, signalling a push not just in scale, but also in geographic diversity.

But these are not copy-paste stores. There is a strategic blend at work. Of the 16 new additions, 9 are exclusive mono-brand boutiques, 7 are multi-brand watch stores, and 2 cater to lifestyle and pre-owned segments.

That means Ethos is not just growing its floor space; it is deepening its brand relationships and segment offerings at the same time. Locations like Jio World Plaza in Mumbai and The Chanakya in New Delhi speak to the company’s premium positioning. These malls are home to global names in luxury, and Ethos wants to be counted in that league.

It is a smart play as consumers already shopping at Dior or Louis Vuitton are the same ones who may step into Ethos to buy a Rolex or browse a curated pre-owned collection. These spaces also allow Ethos to test demand beyond watches, through offerings like high-end jewellery and travel accessories. And with each store, Ethos is not just selling watches — it is reinforcing a luxury lifestyle identity.

The challenge, of course, is that these stores do not come cheap. High rents, premium design, top-tier staff, and slow ramp-up curves mean that profitability takes time. But if Ethos’s bet is that India’s luxury appetite is about to scale, then being early may matter more than being efficient in the short run.

Luxury beyond the wrist

Ethos’s vision stretches beyond watches. The recent expansion into high-end lifestyle categories underscores its ambition to become a broader luxury retail platform. In H1 FY26, it launched India’s first boutique for Messika, the French diamond jewellery house, and opened its second boutique for Rimowa, the German maker of premium travel gear. These additions are not just about diversifying products. They are about deepening Ethos’s presence in the lives of luxury consumers.

The strategy here is clear: once inside an Ethos store, a customer should be able to find not just a Swiss watch, but also a diamond bracelet or a handcrafted luggage trunk. And with each cross-category experience, the company strengthens its brand identity as more than a watch seller, it becomes a destination for curated luxury. Lifestyle boutiques may still be small contributors to the top line, but they open up new ways to engage the same high-spending clientele.

Similarly, the Certified Pre-Owned (CPO) segment, operating under the brand Second Movement, continues to deliver. With a 25% year-on-year growth in billing, it is emerging as an important part of the Ethos portfolio. It not only attracts value-conscious first-time buyers but also offers a circular path for seasoned collectors to trade up, exchange, or build collections.

Together, these verticals show Ethos’s willingness to explore adjacencies not through scattergun launches, but through tightly curated extensions that sit well within its luxury identity. It is a brand growing outward, thoughtfully.

The road ahead

The next chapter for Ethos will not be defined by how many boutiques it opens, but by how well it delivers on what it has already built.

The foundations are strong, that is, top-line growth, brand partnerships, and customer loyalty, but the expectations are even stronger. Investors and observers alike are waiting to see execution match ambition, especially on margins and profit consistency.

The pressures are real: currency volatility, competitive launches, and slower ramp-up periods for new stores. But Ethos has something equally real, and that is momentum. It is riding a cultural shift in how India thinks about luxury, and right now, it is leading the conversation.

If it can manage that delicate balance between scale and control, splash and substance, then it may not just be a luxury retailer. It could become the benchmark for how homegrown luxury evolves in India.

Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting.

Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter and an MBA in Finance from Narsee Monjee Institute of Management Studies.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article.

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