Betting on luxury? This stock's bold goal: 10x revenue in 10 years!

Over the past year, it’s up 52.78%, and in five years, it’s grown an impressive 294%.

Today, we’re looking at one of India's largest luxury and premium watch retailers. This company has positioned itself as a leader in the luxury watch market, offering products from over 65 global brands, with exclusive rights to sell more than 55 of these brands.

In FY24, the company partnered with Rimowa to sell its luxury luggage and with Messika for its luxury jewelry range in India. Notably, it is the only organized player in India that can certify, buy, and restore pre-owned watches.

For investors interested in India’s growing affluent market, this company is worth watching. It targets high-net-worth individuals (HNIs), a segment expected to grow rapidly as India’s wealth base expands. Since demand for luxury goods tends to be less sensitive to price, luxury brands can thrive even when prices rise.

Consider Ethos, which represents over 60 watch brands and continues to add exclusives—it recently gained three more in Q2FY25.

What About the Average Selling Price?

The company’s top-line growth is driven by its average selling price (ASP). Tracking ASP can help you assess its performance. In H1FY25, the ASP for luxury watches was Rs 2,15,952, up from Rs 1.87 lakhs in H1FY24—a year-on-year growth of 15.5 per cent.

Any Challenges?

In H1FY25, the company faced various challenges: heatwaves, election-related slowdowns, heavy rainfall impacting store walk-ins, and disruptions during the Shradh period. Additionally, extreme weather in Switzerland in June affected logistics.

Growth Outlook According to Management

Management expects significant growth with Rimowa, aiming for an 8-10x business increase over five years. The company’s long-term goal is a tenfold growth in revenue within a decade, with potential expansions in luxury jewelry through new brand partnerships.

Regulatory Updates

The government's Group of Ministers (GoM) has proposed a GST rate hike for luxury watches in India. Watches priced over Rs 25,000 will be classified as luxury, with GST rates set to increase from 18 per cent to 28 per cent. If implemented, management anticipates an 8.5 per cent price increase or a mix of discounts and price adjustments to maintain the same net revenue after taxes.

Stock Performance

This year, the stock has performed well, delivering a year-to-date return of 35.85 per cent. Over the past year, it’s up 52.78 per cent, and in five years, it’s grown an impressive 294 per cent. The stock trades at a high PE of 80x, likely due to its robust growth outlook, with a topline CAGR of 18 per cent (FY19-FY24) and profits that have grown roughly 6.3 times.

Let us know in the comments if you own this stock!

Disclaimer: The article is for informational purposes only and not investment advice.