Ethos Ltd Management Discussions

Economic Overview

Global Economic Review

Overview

The global economy continued to demonstrate notable resilience in CY 2025, sustaining growth of an estimated 3.4% despite shifting trade policies, renewed geopolitical conflict, and persistent uncertainty. Activity was supported by a surge in technology-related investment, including artificial intelligence (AI), particularly across North America and Asia, alongside broadly accommodative financial conditions and the adaptability of the private sector. The United States economy remained firm, aided by technology investment and supportive fiscal and monetary policy. In contrast, growth in the euro area stayed subdued amid structural headwinds and the lingering effects of elevated energy costs, while Chinas growth moderated as weakness in its housing sector weighed on domestic demand, partly offset by resilient exports.1

Outlook

Looking ahead, the global economic outlook remains steady but tilted to the downside. Global growth is projected to ease modestly to 3.1% in CY 2026 and 3.2% in CY 20272 , as the drag from tariffs and uncertainty gradually fades while momentum in high-technology sectors moderates. Emerging markets and developing economies are expected to continue outperforming their advanced-economy counterparts. Global headline inflation, estimated at 4.1% in CY 2025, is projected at 4.4% in CY 2026 before easing to 3.7% in CY 2027, reflecting the impact of higher energy prices arising from geopolitical conflict ahead of a resumption of the broader disinflationary trend.

Although geopolitical risks — particularly conflict in the Middle East — and elevated policy uncertainty persist, easing trade tensions, accommodative financial conditions, fiscal support, and ongoing structural reforms are expected to underpin macroeconomic stability. With gradual disinflation, resilient private-sector activity, and sustained investment in technology, the foundation is being laid for a steady, if uneven, global recovery.

Indian

Indian Economic Review

During the year under review (FY 2025-26), India retained its position as the worlds fastest-growing major economy, with real GDP expanding by 7.7%, as against 7.1% in FY 2024-253 (as per the revised National Accounts series with base year 2022-23). This robust performance reaffirmed the economys resilience amidst global headwinds, including geopolitical conflict and trade-policy uncertainty, and was underpinned by buoyant private consumption, strong investment activity, and a marked acceleration in the services sector. Growth momentum remained healthy through the year, with quarterly real GDP growth ranging between 7.8% and 8.2%4, led by double-digit expansion in trade, hotels, transport and communication services and resilient manufacturing.

Inflationary pressure eased sharply during the year. Consumer Price Index (CPI) inflation moderated to a multi-year low of around 2.5% in FY 2025-26, from 4.9% in FY 2024-25, supported by subdued food prices, remaining well within the Reserve Bank of Indias (RBI) target band. This softer inflation, together with improving employment and consumer sentiment, reinforced private consumption and supported demand across discretionary and retail segments. India also continued to attract robust foreign direct investment and recorded a narrowing current account deficit, further underscoring the strength of its external position

Outlook

Looking ahead, the outlook for the Indian economy remains constructive, with real GDP growth projected at around 6.5% for FY 2026-27, supported by resilient domestic demand, continued public capital expenditure, and ongoing structural reforms. The Union Budget 2026-27 is expected to play a pivotal role in sustaining this momentum, prioritising productivity, competitiveness, and resilience to global volatility, while maintaining the path of fiscal consolidation — with the fiscal deficit budgeted to narrow to 4.3% of GDP and the debt-to-GDP ratio targeted at 50?1% by 2030-31.

A significant feature of the policy landscape is the continued effective exemption of income tax for individuals earning up to H12.75 lakh, together with the implementation of the simplified Income Tax Act, 2025 from 1 April 2026, which are anticipated to release substantial disposable income into the hands of middle-class households. This, coupled with the cumulative 100 bps reduction in the repo rate by the Reserve Bank of India (RBI) to 5.25% during the year5, will enhance liquidity in the system. Additionally, the implementation of the 8th Pay Commission is expected to provide further impetus to discretionary spending, thereby supporting demand for premium and luxury goods.

Favourable developments in global trade, including recently concluded free trade agreements, and Indias increasing integration into global supply chains are poised to strengthen net external demand.

Global Premium and Luxury Watch

Overview

The global premium and luxury watch market navigated a challenging year in CY 2025, marked by softer demand in key markets even as the upper end of the segment remained resilient. The global luxury watch market is estimated at approximately USD 45 billion in 2025. Swiss watch exports — the global benchmark for high-end watchmaking — declined by 1.7% to CHF 25.6 billion in 2025, a second consecutive year of contraction following the all-time records of 2021, 2022 and 2023. The subdued performance was driven primarily by a significant contraction in China (–12%) and Hong Kong (–6.5%), and a decline in Japan (–5.8%)6, compounded by the disruption from evolving US tariffs, while the price of gold and the Swiss franc reached record highs, significantly increasing the cost of Swiss watches on foreign markets. Notably, the highest price segments continued to show steady demand even as the majority of products saw a downturn, underscoring the resilience of the luxury and high-luxury categories.

Outlook

Looking ahead, the global premium and luxury watch market is positioned for renewed growth, projected to reach around USD 61 billion by 2032 at a CAGR of approximately 4.5%7, supported by rising global wealth and the expanding affluent population. Growth is expected to be driven by technological innovation, evolving consumer perception, and the increasing recognition of luxury timepieces not only as symbols of prestige and personal style but also as viable, value-retaining investment assets. The United States, which accounted for 17% of Swiss watch exports in 2025, has consolidated its status as the main destination market, while the Middle East and India have emerged as notable bright spots, and the broader recovery is expected to depend on a gradual stabilisation of demand in China.8

Indias watch industry

With rising disposable incomes and growing fashion consciousness, the Indian watch market continues to expand robustly. The Indian watch market is estimated at USD 4.19 billion in 2025 and is projected to reach USD 7.52 billion by 2031, growing at a CAGR of 10.23%, with the premium segment poised to grow at an 8.53% CAGR and online retail at 9.12%, led by metropolitan and Tier-II consumers.10 A significant structural tailwind is the India–EFTA trade agreement, the phased removal of the customs duty on Swiss watches — under which the duty has already fallen from a base of 22% to 15.71% across the first two tranches, en route to full elimination by 2031 is set to lower retail prices and broaden the premium customer base. While offline retail retained a commanding 77.72% share in 2025, the rapid formalisation of the market and the entry of new brands are expected to intensify competition.

Preference for luxury products in India

Recent years have witnessed a marked shift in Indias demand and preference patterns. With rising aspirations and an increasing demand for quality, luxury products continue to record strong growth in sales, supported by Indias robust economic expansion, higher per capita income, and rising consumption.

India is home to one of Asias fastest-growing luxury markets. The countrys strong economic growth has driven a steady increase in the number of high-net-worth and ultra-high-net-worth individuals — UBS estimates that Indias affluent population is likely to double by 2028 to 88 million — further fuelling demand for luxury products, particularly watches. This momentum is reflected in Swiss watch exports to India, which rose 8.9% in 2025, following an increase of 25.2% in 2024 — confirming the rapid expansion of luxury in the country, among the strongest growth rates of any major market.

Outlook

The market is expected to maintain its growth momentum, supported by continued premiumisation and rising aspirational consumption. Consumer preference is likely to remain focused on branded, certified and high-value timepieces, while expansion into non-metro markets and deeper retail penetration are expected to drive additional growth opportunities. Together, evolving consumer preferences and strengthening distribution networks should continue to support the segments overall growth trajectory.

Global

The global pre-owned watch market has continued to witness remarkable growth, emerging as one of the fastest-growing segments within the broader horology industry. The global pre-owned luxury watches market was estimated at USD 24.38 billion in 2023 and is projected to reach USD 45.01 billion by 2030, growing at a CAGR of 9.2%, with Asia-Pacific the fastest-growing region11. This expansion is driven primarily by affordability, sustainability, and immediate availability, which collectively make high-end timepieces more accessible without compromising on brand appeal.

The proliferation of trusted online and offline marketplaces — offering authentication, warranties, and transparent pricing — has further legitimised the segment, while the active participation of leading luxury brands through certified pre-owned (CPO) programmes has significantly enhanced consumer trust. Encouragingly, secondary-market prices rose 4.9% over the full year 2025, a meaningful recovery from declines of 6.1% in 2024 and 10.7% in 2023,12 reflecting renewed collector confidence. With growing awareness, brand acceptance, and digital accessibility, the global pre-owned segment is expected to remain a powerful growth engine within the luxury watch market.

Consequently, pre-owned timepieces are increasingly regarded as prudent and sustainable investments that pair the prestige of luxury with more accessible entry price points. Supported by rising consumer awareness, growing brand participation, and expanding digital access, the global pre-owned watch segment is expected to remain a key engine of growth within the luxury watch market.

Indian

In India, the pre-owned luxury watch segment is on the cusp of rapid expansion, mirroring trends observed in other emerging economies. Indias pre-owned luxury watch market is among the fastest-growing segments in the category, expanding at a CAGR of roughly 11% as authentication, warranties, and brand-led certification steadily build consumer trust.13 This growth is driven by affordability, sustainability, and the increasing perception of timepieces as investment assets, with majority of Indian watch buyers indicating interest in certified pre-owned, according to Deloittes spotlight on the Indian watch buyer. The pre-owned channel also offers access to rare, discontinued, and antique timepieces that are otherwise extremely difficult to source, lending the segment a distinct collector appeal and a further point of differentiation. The maturing ecosystem of authentication, refurbishment, and resale platforms is expected to support healthier, more transparent pricing in the pre-owned channel.

Moreover, the continued growth of Indias primary luxury watch market is anticipated to set in motion a self-reinforcing cycle of demand, thereby widening opportunities within the pre-owned category. With Indian consumers becoming progressively more brand-conscious and investment-oriented, the pre-owned watch market is poised to develop into a key engine of growth, presenting considerable potential for both established and emerging participants in the horology sector.

Swiss Watch Market

Overview

Swiss watchmaking continues to set the global benchmark for fine horology — a standing built on precision engineering, deep heritage, and exacting craftsmanship. The year under review, however, ranked among the more testing in recent memory. Demand cooled across several established markets, the United States introduced steep new import duties, and record highs in both the Swiss franc and gold prices lifted production and retail costs in tandem. Against this backdrop, India stood out as a clear pocket of strength, its widening base of affluent, brand-aware consumers turning the country into a focal point of the industrys growth ambitions.

In India, a fine Swiss watch is increasingly acquired as a marker of personal achievement and as an heirloom to be handed down, rather than as a simple accessory. The India–EFTA Trade and Economic Partnership Agreement, under which duties on Swiss watches are being phased down, is expected to encourage a wider range of global watch brands to establish a presence in India over time and ultimately deepening the breadth and quality of choice available to Indian consumers, a landmark development for the countrys luxury watch market, while continuing to reinforce the appeal of officially retailed timepieces.

The aggregate numbers reflected the strain. The United States remained the largest market at 16.8% of exports (CHF 4.4 billion in 2024), even as a 39% US import tariff on Swiss watches took effect on 7 August 2025, while exports to China fell to CHF 2.1 billion in 2024, a decline of 26%. Yet the market remained distinctly two-speed: around 64% of executives viewed the outlook for high-end watches above CHF 50,000 positively, while close to 60% rated the entry-level and midrange segments negatively. India was the exception to the broader softness — exports to the country rose nearly 7% in the first eight months of 2025 and by more than 30% over two years, making it the fastest-growing major market for Swiss watches.15

Outlook

The medium-term outlook is one of measured confidence rather than exuberance. India is widely seen as the single most promising market — close to four in five industry executives (79%) anticipate medium-to-strong growth there — but converting that potential into durable share will depend on consistent brand-building, localisation, and the education of a relatively young collector base. Manufacturers are responding by deepening ties with trusted retail partners and investing in experiential, omnichannel formats designed around the Indian buyer.

The pre-owned and certified pre-owned (CPO) market is becoming an increasingly important profit pool, opening fresh revenue channels and extending brand lifecycle value; tellingly, 40% of millennial and Gen Z consumers say they are likely to buy a pre-owned watch in the coming year. Sustainability, too, is moving from the periphery to the core of brand strategy, with leading houses embedding ethical sourcing, eco-innovation, and circular-economy principles into how their watches are made and sold.

Ultimately, sustained leadership will reward the brands that can hold competing priorities in balance — heritage alongside innovation, exclusivity alongside accessibility, and craftsmanship alongside conscious luxury. As a younger, more digitally fluent generation of collectors comes to the fore, those that pair authentic storytelling with a seamless physical-and-digital experience will be best placed to capture the next phase of growth.

Indian Premium and Luxury Watch Industry

Overview

Indias premium and luxury watch segment has moved from the margins to the mainstream of the countrys consumption story. Powered by sustained economic momentum and a steadily broadening affluent class, it is riding a structural shift in which a rising share of households is crossing into the upper-middle and high-income brackets — a proportion set to expand materially by the end of the decade. The outcome is a deepening pool of discretionary spending, led by high-net-worth individuals and a notably young cohort of aspirational buyers for whom a fine timepiece signals success and identity as much as taste.

Indias wider luxury goods market, estimated at around USD 7 billion in 2024, is projected to expand to roughly USD 30 billion by 2030, driven by younger generations. Within that expansion, globally renowned Swiss and international brands are capturing a disproportionate share — a momentum underscored by the more-than-30% rise in Swiss watch exports to India over the two years to 2025.16 With younger consumers gravitating towards exclusivity, craftsmanship, and brand heritage, the category has reached a genuine inflection point, positioning India among the most attractive long-term frontiers for global watchmakers.

Outlook

The trajectory ahead is firmly positive. Resilient economic growth, rising incomes, and an expanding base of dollar millionaires are expected to keep demand for premium timepieces on an upward path. Just as importantly, the spread of e-commerce and digital discovery has carried luxury brands well beyond the metros into Tier 2 and Tier 3 cities, unlocking aspirational demand that was previously difficult to reach and sharpening brand visibility and engagement across the country. Markets like India are viewed as a source of young, dynamic customers who are open to innovation, offering the Swiss watch industry a long-term avenue to broaden its global footprint.17

Swiss heritage houses are leaning into this opportunity — expanding their retail presence and building omnichannel strategies tailored to Indian tastes. A parallel trend is the rising appetite for personalised, bespoke, and limited-edition pieces among younger, brand-literate buyers who prize rarity and provenance. With a favourable demographic dividend, fast-evolving preferences, and deepening brand affinity, India is well positioned to rank among the most strategically important markets for global luxury watch brands over the coming decade.

Growth Drivers

The Company operates in Indias premium and luxury watch retail segment, one of the countrys most attractive and fastest-growing consumption categories. Backed by a pan-India presence, deep category expertise, and a long track record of navigating market cycles, the Company is well positioned to convert the structural expansion of this market into sustained, profitable growth. The principal growth drivers identified by the Management are set out below.

Risk management

The Board of Directors of Ethos undertakes a timely review of the business risks and, in conjunction therewith, implements appropriate measures to mitigate such risks at the earliest. The Senior Leadership Team, led by the Chairman & Whole Time Director and the Managing Director & CEO, is responsible for executing the mitigation measures necessary to manage the identified risks. The Company has further constituted a Risk Management Committee, which oversees and reviews the business risks of the Company from time to time.

Financial Performance With Respect to Operational Performance:

During FY 2025-26, Ethos Limited delivered strong top-line growth, even as profitability was tempered by external cost pressures. On a standalone basis, turnover (including other income) rose to H1,65,311.97 lakhs, an increase of approximately 29.5% over H1,27,651.39 lakhs in the previous year, while consolidated turnover grew by a comparable margin to H1,65,840.54 lakhs. This growth was led by a deliberate shift

towards the luxury and high-luxury segments, volume growth, and the continued scaling of the certified pre-owned (CPO) business.

Profitability reflected a more demanding operating environment. Standalone profit before tax and profit after tax moderated to H12,746.95 lakhs and H 9,492.23 lakhs respectively (from H13,155.29 lakhs and H9,825.41 lakhs), while on a consolidated basis profit before tax rose to H13,085.16 lakhs and profit after tax (after minority interest) stood at H9,476.52 lakhs. Margins were affected principally by the

sharp appreciation of the Swiss Franc against the Rupee, up over ~23% during the year and crossing H120 in January 2026, which increased the cost of imported inventory, together with higher marketing investment and the upfront costs of an accelerated pace of boutique expansion. Consequently, the operating profit margin moderated to 9.55% and the net profit margin to 5.89%. Earnings per share of H36.27 (standalone) and H36.21 (consolidated) additionally reflect the enlarged equity base following the rights issue undertaken during the year.

Operationally, the Company expanded its boutique network from 73 to 94 boutiques across 30 cities (102 boutiques across 103 boutiques across 34 cities as on date), deepened its omnichannel capabilities, strengthened its after-sales service vertical, and added new brand partnerships across its luxury and high-luxury portfolio — including the reorganisation of its lifestyle vertical, comprising the Messika and

Rimowa businesses, under a dedicated entity, Ethos Lifestyle Private Limited. These initiatives supported higher footfalls, a richer product mix, and stronger customer engagement.

The Companys Balance Sheet strengthened materially during the year. The current ratio improved to 5.48 times (from 4.97), reflecting a more robust liquidity position, while the debt-equity ratio eased to 0.21 times (from 0.28), aided by the equity raised through the rights issue. The Debtors Turnover Ratio improved to 90.54 times (from 73.99), reflecting efficient receivables management, and the Inventory Turnover Days improved to 222 days (from 246) reflection of better inventory management. The Interest Coverage Ratio moderated to 5.80 times (from 7.78), primarily on account of lower operating profit and higher finance costs associated with lease liabilities recognised on new boutiques under Ind AS 116.

Overall, the Companys performance reflects healthy operational execution and disciplined balance-sheet management, even as currency and expansion-related costs weighed on near-term margins. The management remains focused on long-term value creation through profitable and sustainable growth.

Financial Review

* Consolidated profit after tax is stated after minority interest.

Details of significant ratio changes - Standalone

Explanation for variance in ratios a. Debt Equity Ratio — The debt-equity ratio decreased from 0.28 to 0.21 due to infusion of funds through rights issue proceeds during the year ended March 31, 2026, resulting in strengthening of the Companys equity base.

b. Return on Equity Ratio — The return on equity ratio decreased from 10.55% to 7.71% primarily due to increase in shareholders equity consequent to infusion of funds through the rights issue. Further, net profit declined compared to the previous year on account of adverse foreign exchange fluctuations in global markets, which impacted the cost of imported materials. As a result, despite the increase in equity base, profitability declined during the year.

c. Net Profit Ratio — The net profit ratio decreased from 7.85% to 5.89% mainly due to upfront investment in expansion, operating and other costs, despite growth in revenue and improved business performance during the current year.

d. Return on Capital Employed — ROCE decreased from 12.00% to 8.60% primarily on account of increase in capital employed following fund infusion during the year, while the corresponding return generation remained moderate.

e. Return on Investment — ROI decreased from 3.44% to 1.68% mainly due to lower returns earned on investments and increase in the investment base during the current year.

Human Resource

The Company recognises that a competent and motivated workforce constitutes a fundamental driver of its sustained performance. Ethos remains committed to attracting and retaining qualified professionals whose objectives are consistent with the Companys values, vision, and customer-centric orientation. The Companys human resource policies have been framed to ensure that each member of the workforce contributes meaningfully towards the attainment of the Companys growth objectives.

The Company undertakes regular investment in training and development initiatives and promotes a culture of continuous learning across the organisation. Such initiatives enable employees to remain apprised of prevailing industry developments, augment their functional competence, and enhance the quality of service rendered.

Employee recognition and performance management form an integral component of the Companys human resource practices. Periodic evaluations, structured feedback mechanisms, and merit-based recognition collectively foster a transparent and performance-oriented working environment.

As on March 31, 2026, the Company employed 1069 full-time personnel, of whom 225 are women, representing approximately 21.0% of the total workforce, in furtherance of the Companys commitment to diversity and inclusion.

The Company further accords due emphasis to employee well-being. Medical and accidental insurance coverage, together with periodic health and wellness check-ups, form part of the Companys employee care framework, thereby supporting both professional development and workforce continuity.

The Company has a strong and experienced leadership team in place, supported by well-defined succession planning processes to ensure management continuity and organizational stability.

Internal Control Systems and Their Adequacy

Ethos Limited has instituted robust internal control systems together with a structured internal audit framework, with a view to safeguarding the Companys assets, ensuring the accuracy and reliability of financial reporting, and facilitating effective operational management. The internal audit function operates independently and reports directly to the Audit Committee and the Board of Directors, thereby ensuring oversight and transparency at the highest levels of governance.

As part of the said control framework, the Company conducts monthly and quarterly business reviews to assess unit-level performance and effect timely corrective measures. A well-defined capital expenditure control mechanism has been established to monitor and approve investments in assets and new projects, thereby ensuring prudent financial management and adherence to the approved budgets and timelines.

The findings of the internal audit, together with the corresponding corrective actions, are reported to the Audit Committee and the Senior Management Team on a periodic basis. The Audit Committee further reviews the quarterly, half-yearly, and annual financial statements, thereby providing governance-level assurance as to financial integrity and the effectiveness of the internal controls.

During the year under review, the Company undertook a comprehensive evaluation of its internal financial controls, the results whereof indicated satisfactory compliance. The recommendations arising therefrom were implemented in a timely manner. The Company continues to refine its Policy Guidelines and Standard Operating Procedures (SOPs) to ensure alignment with evolving corporate governance standards and applicable regulatory requirements.

Disclosure of Accounting Treatment

The financial statements of Ethos Limited for the year ended March 31, 2026 have been prepared in accordance with the applicable Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time), and other applicable provisions of the Companies Act, 2013.

No change has been made in the accounting treatment followed by the Company during the year under review as compared with the immediately preceding financial year. The accounting policies have been applied consistently to preserve the comparability and reliability of the financial information presented.

No treatment differing from that prescribed under any applicable accounting standard has been adopted in the preparation of the financial statements which would necessitate specific disclosure under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Affirmation

The Management Discussion and Analysis Report for the financial year ended March 31, 2026, as set out hereinabove, was reviewed and approved by the Board of Directors of the Company at its meeting held on August 03, 2026. The Report reflects the Companys commitment to transparent disclosure and has been prepared in compliance with the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other applicable statutory requirements, to the extent applicable.

Disclaimer

This Management Discussion and Analysis Report contain certain forward-looking statements premised on current expectations, estimates, and projections concerning future developments. Such statements are subject to known and unknown risks, uncertainties, and assumptions which may cause the actual results, performance, or achievements of the Company to differ materially from those expressed or implied herein.

In addition to macroeconomic and geopolitical factors, the Company operates within an evolving business environment that is susceptible to unpredictable and rapidly changing external conditions. The forward-looking statements contained in this Report are based upon the information available on the date of publication and reflect the Companys current views, beliefs and expectations.

Such statements shall not be construed as guarantees of future performance. Readers are accordingly cautioned not to place undue reliance upon the said forward-looking statements, as the same do not constitute historical facts and are inherently subject to change. The Company assumes no obligation to publicly update or revise any forward-looking statement, whether on account of new information, future events, or otherwise, save as may be required under applicable law.