Two stock recommendations from Trade Brains Portal for 17 September
Ethos Ltd (Current price: ₹2,424)
- Target price: ₹2,895 in 12 months
- Stop loss: ₹2,185
- Why it’s recommended: Founded in 2003, Ethos Limited is India’s leading luxury watch retailer, offering a curated collection of over 5,000 timepieces from nearly 70 premium brands, including Rolex, Omega, Rado, and Bvlgari. As of Q1FY26, the company operates 80 stores across 26 cities. Ethos holds a first-mover advantage in the expanding pre-owned luxury watch segment, which is gaining traction due to its affordability and immediate availability. The company segments its watch offerings across four pricing tiers: premium ( ₹25,000-1 lakh), bridge to luxury ( ₹1-2.5 lakh), luxury ( ₹2.5-10 lakh), and high luxury ( ₹10 lakh and above).
During Q1 FY26, Ethos added three exclusive watch brands, Fabergé, D1 Milano, and UNIMATIC, and one lifestyle brand, FPM Milano. It also launched eight new boutiques, including India’s first exclusive Messika Paris boutique in Delhi, marking the French jewellery house’s official entry into the Indian market and further strengthening Ethos’ global luxury brand portfolio.
The average selling price of a watch in Q1FY26 was approximately ₹2.13 lakh, reflecting a 17% CAGR growth since FY21. Revenue contribution from exclusive brand boutiques stood at 28.7% in Q1FY26, slightly up from 28.4% in Q1FY25. Same-store sales growth (SSG) improved to 17.6% in Q1FY26, compared to 12.3% in the same quarter last year. Management anticipates the number of boutiques to surpass 100 by the end of FY26. The luxury watch market continues to be driven by rising numbers of HNIs in high-growth economies, increased demand in the pre-owned segment, and growing consumer fashion awareness.
In Q1FY26, Ethos Limited reported operating revenue of ₹346.3 crore, registering a 26.7% YoY increase from ₹273.2 crore in Q1FY25. Since FY21, the company has delivered a strong revenue CAGR of 34%. However, PAT for Q1FY26 declined 16.2% YoY to ₹19.1 crore, primarily due to volatility in the CHF/INR exchange rate. Adjusted for currency fluctuations, PAT would have been ₹23.3 crore. Despite this temporary impact, PAT has grown at a remarkable CAGR of 113% since FY21. Total billings for the quarter stood at ₹401.2 crore, up 26.12% YoY, maintaining the company’s consistent CAGR of 34% since FY21.
- Risk Factor: Ethos operates with inherently high working capital requirements, as it must maintain a diverse and substantial inventory across various watch categories to meet global display standards and ensure a premium customer experience. As a net importer, the company sources approximately 40% of its watches from international markets, making it vulnerable to foreign currency fluctuations. Additionally, Ethos is dependent on consumer discretionary spending, and any regulatory changes, particularly those related to taxation or import duties, could adversely impact its operations and overall performance.
P N Gadgil Jewellers Ltd (Current price: ₹634)
- Target price: ₹755 in 12 months
- Stop loss: ₹570
- Why it’s recommended: P N Gadgil Jewellers, originally established in 1832 in Sangli as Shri Ganesh Narayan Gadgil, is today the second-largest organised jewellery brand in Maharashtra by number of stores. Incorporated in 2013 as P N Gadgil Jewellers Private Limited, the company appointed Bollywood actress Madhuri Dixit as its brand ambassador. In 2024, the company achieved a significant milestone by getting listed on both the BSE and NSE. As of Q1 FY26, it operates 55 stores across 27 cities globally, covering a total retail area of 169,174 sq. ft. Of these, 42 stores follow the Company Owned Company Operated (COCO) model, while 13 operate under the Franchise Owned Company Operated (FOCO) model. The brand offers a wide and diverse product portfolio comprising 15 collections and 39,663 Stock Keeping Units (SKUs).
In Q1 FY26, the company reported revenue from operations of ₹1,714.5 crore, registering a 2.8% YoY increase. EBITDA rose sharply by 85.4% YoY to ₹122.8 crore, with an improved EBITDA margin of 7.2%, up by 320 basis points. Consolidated PAT stood at ₹69 crore, marking robust 96.3% YoY growth, while PAT margin improved by 190 basis points to 4%. Total debt as of the quarter stood at ₹854 crore. The retail segment remained the company’s main growth driver, contributing 70.3% of total sales and delivering 19% YoY growth. The e-commerce segment surged 126% YoY to ₹66 crore, and franchise revenue grew 109% YoY to ₹269 crore. Studded jewellery also saw strong momentum, with a 41.6% YoY increase, now contributing 10% to total retail sales.
Operational metrics continued to demonstrate strong performance. Revenue per store stood at ₹31 crore, while net profit per store reached approximately ₹1.3 crore, highlighting efficiency and profitability across locations. Customer engagement strengthened, with transaction volumes increasing by 23% and average transaction value ranging between ₹95,000 and ₹1,00,000. Footfall grew by 25%, supported by a high conversion rate of nearly 92%.
Looking ahead, the company plans to add 23-25 new stores over the next three quarters, with 9 stores expected in Q2 FY26. It aims to scale its network to 100 stores over the next five years by adding 10-15 liteStyle stores annually. For FY26, management has guided revenue in the range of ₹9,000-9,500 crore, with expected PAT margins between 3.5% and 4%.
- Risk Factor: P N Gadgil Jewellers operates in a highly competitive landscape, contending with both large organised players such as Titan, Kalyan Jewellers, PC Jeweller, and Thangamayil, as well as a vast network of unorganised local jewellers. The company’s profit margins are particularly sensitive to fluctuations in gold prices, which can impact both consumer demand and inventory valuation. Moreover, the jewellery industry is governed by stringent regulatory norms, including mandatory hallmarking, restrictions on bullion purchases, and caps on gold savings schemes, all of which can lead to increased compliance costs. The company’s performance is also influenced by seasonality and consumer discretionary spending, which tend to fluctuate with broader economic conditions.
Market Recap
On Tuesday, the Nifty 50 opened on a flat note at 25,073.6, up just 4.4 points from its previous close of 25,069.2. It touched an intraday high of 25,261.4 before closing at 25,239.1, up by 169.9 points or 0.68%. Technically, the index remained above all four key exponential moving averages (20/50/100/200-day) on the daily chart.
The BSE Sensex also reflected a flattish trend, opening at 81,852.11, up 66.37 points from its previous close of 81,785.74. It traded in a similar range to the Nifty 50 and settled at 82,380.69, marking a gain of 594.95 points or 0.73%. Momentum indicators showed moderate strength, with the RSI for Nifty 50 at 63.84 and for Sensex at 63.11, both below the overbought level of 70. The Bank Nifty Index closed in positive territory, gaining 259.75 points, or 0.47%, to finish at 55,147.6.
The majority of the sectoral indices ended in green, with barely any losers on Tuesday. The Nifty Auto Index emerged as the top performer, climbing 385.75 points, or 1.4%, to end at 27,146.4. Balkrishna Industries Ltd gained 2.6%. Other auto stocks like MRF Ltd, Mahindra & Mahindra Ltd, Bharat Forge Ltd, and Maruti Suzuki India Ltd also rose by up to 2.4%. The Nifty Realty index gained 9.7 points, or 1.1%, closing at 915.35. Top gainers included Prestige Estates Projects Ltd, The Phoenix Mills Ltd, DLF Ltd, and Godrej Properties Ltd, all of which rose by up to 1.9%. The Nifty Infrastructure Index also posted modest gains, closing at 9,190.65, up 93.05 points, or 1%.
On the downside, the Nifty FMCG Index was the only major loser, closing at 56,398.65, down 152.7 points or -0.3%. Godrej Consumer Products Ltd dropped 2.2%, while Varun Beverages Ltd and Dabur India Ltd slipped by up to 1.9%.
Asian markets were largely positive on Tuesday. China’s Shanghai Composite Index was flat at 3,861.87, up 1.37 points, or 0.04%. Whereas, Hong Kong’s Hang Seng Index fell marginally by 11.56 points, or -0.04%, to close at 26,435. South Korea’s KOSPI Index closed higher at 3,449.62, up 42.31 points or 1.23%, while Japan’s Nikkei 225 Index advanced 236.88 points, or 0.53%, finishing at 45,005. As of 3:56 p.m. IST, US Dow Jones Futures were trading at 45,907.95, up 24.5 points, or 0.05%the coming days.
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