Ethos Limited (ETHOSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '25 Earnings Conference Call of Ethos Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Saboo MD and CEO, Ethos Limited. Thank you, and over to you, sir.

Good evening, everyone. Thank you for joining us on the Ethos Limited Q2 and H1 FY '25 Earnings Conference Call. I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on the company's website and stock exchanges. I'm accompanied by our CFO, Mr. Munish Gupta; and our COO, Mr. Mukul Khanna, and SGA, our Investor Relations adviser. Let me talk directly with our performance. For Q2 FY '25 versus Q2 FY '24. Revenue from operations is up 26.3% to INR 297.1 crores in Q2 FY '25 as compared to INR 235.2 crores in Q2 FY '24. Revenue from exclusive brands stood at 31% of the total revenue in Q2 FY '25. Billing of CPO stood at INR 23 crores in Q2 FY '25. EBITDA for the quarter grew by 16.1% year-on-year to INR 48.2 crores in Q2 FY '25 as compared to INR 41.5 crores in Q2 FY '24. EBITDA margin stood at 15.9% in Q2 FY '25. PAT grew by 14% to INR 21.2 crores in Q2 FY '25 as compared to INR 18.6 crores in Q2 FY '24. PAT margin stood at 7%. For H1 FY '25 versus H1 FY '24, revenue from operations is up by 22.6% to INR 570.4 crores in H1 FY '25 as compared to INR 465.2 crores in H1 FY '24. EBITDA grew by 22.2% year-on-year to INR 98 crores in H1 FY '25 as compared to INR 80 crores in H1 FY '24. EBITDA margin stood at 16.8% in H1 FY '25 as compared to 16.9% in H1 FY '24. EBITDA margin impacted due to an additional cost in H1 FY '25 attributable to the following: ForEx fluctuation, increased manpower for new store additions, rental for new stores, which are in the nascent stages of sales. PAT grew by 19.9% to INR 44 crores in H1 FY '25 as compared to INR 36.7 crores in H1 FY '24. Inventory days as on 30th September stood at 177 days. Cash and bank balance stood at INR 271.4 crores as of 30th September 2024. Our ASP for H1 FY '25 stood at INR 215,952 as compared to INR 1.87 lakhs in H1 FY '24. Share of luxury and high luxury watches for H1 FY '25 stood at an all-time high. The first half of FY '25 was marked by several challenges, starting with the extreme heat wave that led to more customers spending time outside of India, extending their holiday. The general election resulted in slower cash movements, while heavy rainfall in certain areas, fewer walk-in and a decline in weddings were key challenges that were faced. Logistical challenges also arose due to natural calamities and extreme weather in Switzerland in June. The short period was also a mismatch in quarter 2. All of these factors significantly impacted our business activities. Despite these obstacles, we achieved revenue growth of 22.6% in H1 FY '25, reaching INR 570.4 crores compared to H1 FY '24. Our overall volume increased by 17% in Q2 FY '25 and 5% in H1 FY '25 on a Y-o-Y basis. Our average selling price rose to INR 2.16 lakh from INR 1.87 lakhs in the first half. Further, we are optimistic about the third quarter, which includes major festive events and an increase in weddings. Traditionally, this period brings a surge in consumer spending and early times are already encouraging. In October, we had a record month with a 47% year-on-year growth. Looking ahead, we are confident that the festive season and heightened wedding activities in quarter 3 paired with our continuous efforts in operational excellence and customer engagement will drive robust results. Additionally, our same-store growth for the first half of FY '25 demonstrates strong progress, reaching 15.5% in H1 FY '25. Let's now discuss some factors around quarter 2. It is also worth noting that the short period, as I mentioned, which typically affects business activities occurred in quarter 2 this year as compared to quarter 3. This improvement signals the effectiveness of our strategies and laid strong foundations for the growth. During the quarter, we experienced significant fluctuations in foreign exchange, particularly with the INR against the CHF. This movement had a notable impact on our financial results with the resulting in a ForEx loss of approximately INR 4.65 crores. Excluding the ForEx fluctuation, our actual EBITDA for Q2 would be INR 52.9 crores with a growth of 27.4% Y-o-Y. And for H1, it would be INR 102.7 crores with a growth of 28.1% Y-o-Y, and margins of 17.5% and 17.6%, respectively. Similarly, PAT would have grown by 32.7% in the quarter -- similarly, PAT would have grown by 32.7% to INR 24.7 crores in the quarter. Also, this performance has come in despite a far greater number of renovations taking place in quarter 2 than normal. The number of boutiques under full renovation represent 20% of our business. We had accelerated the renovations in preparations for many large brands that want to enter India in the next year and the coming years. At the beginning of the year, we announced our plan to add 20 new stores by FY '25. We are pleased to report that from April 2024 to present time, we have successfully opened 12 stores with a total capital outlay of INR 35 crores. Looking ahead, we are actively working on adding 13 more stores before the end of FY '25. This expansion aligns with our growth strategy and commitment to increasing our market presence. Each new store is carefully selected based on market potential and consumer demand, ensuring that we continue to meet the needs of our clients effectively. We are excited about the opportunities these expansions will bring and remain dedicated to delivering quality service in every location that we open. Regarding our brand partnerships, we are pleased to announce that if from -- since April 2024, we have signed exclusive agreements with 3 more brands, which are ID Geneve, Singer Reimagined and HAUTLENCE. These partnerships reflect our commitment to curating diverse luxury watch brands and bringing these luxury watch brands to India that resonate with our customers and enhance our product offerings. Ethos has become the preferred partner for many international brands looking to establish a foothold in India, reflecting our dedication to quality, reliability and market expertise. Our team proactively communicates with these brands to cultivate solid partnerships and strategically expand our portfolio. Through these collaborations, we aim to bring a broader selection of world-class luxury brands to our valued clientele enhancing the diversity and sophistication of our offerings. We look forward to sharing more details about these upcoming partnerships in the near future. We are delighted to announce that our progress on our inaugural Messika jewelry boutique at Chanakya Mall Delhi is well underway. Currently in the setup phase the boutique is on track to open its doors by January or February 2025. This new boutique promises a refined and immersive experience, highlighting Messika's exceptional craftsmanship and exquisite design collection. We are excited also to hear about the successful global launch of Favre Leuba in Geneva on August 29, 2024. Ethos has entered into the long-term exclusive agreement with Favre Leuba for India, and we will be proud to bring the brand into our brand portfolio. Our second movement -- in our second movement -- in our pre-owned segment, the certified fee-owned business, which is second movement. It has experienced a 25% year-on-year growth, reaching billings of INR 43 crores in H1 FY '25. As a part of our strategy, we are focusing on acquiring more high-value watches on a consignment basis and receiving a tremendous response. Customers increasingly recognize the value of purchasing from an organized and trusted source. We are actively working to expand this segment, and we anticipate good traction moving forward. Thank you. And now I open the floor to questions and answers.

[Operator Instructions] The first question is from the line of Devanshu Bansal from Emkay Global.

Congratulations on a strong H1 and even stronger start to the festive. My best wishes for the remaining wedding and festive season as well. Pranav, there has been a recommendation of this potential increase in GST by group of ministers. The decision, though, seemingly hard to understand for several reasons, but my first set of questions is to better understand few things here. So currently, my checks are suggesting that India pricing is currently 5% to 7% cheaper versus global destinations, partly because the Swiss bank has appreciated versus the INR and the corresponding MRP increase are yet to be revised. So what is the extent of price increase that you are expecting at the start of next calendar year basis, the division to, say, 99% or whatever the current conversion rate is there?

Do you want to ask your second question as well?

Sure. So I understand it is a difficult projection as of now. But typically, what is the elasticity of demand to such price increases in case there is a historical precedent to this? And thirdly, brands also have significant benefits from this free trade agreement that India has sort of signed, right? So is there any willingness to sort of partially allocate some of those savings to keep the India pricing comparable in case this GST increase sort of actually [indiscernible]?

Okay. So I think the first question -- they're all sort of related questions, so let me try and answer it as much as I can. First of all, currently, the India pricing is a little bit lower. It's become a little bit lower because of the exchange rate. And traditionally, also, India has always been priced aggressively. However, even in brands that are priced a little bit higher, we don't see much of a challenge right now in terms of sales coming through. But right now, price increase will happen, if and when it happens, it will happen on 2 accounts. One is if there is further ForEx movement. Then that will be priced on. But that's -- I mean that will always be happening. If the ForEx moves, ultimately, the price will adjust to the foreign exchange. If foreign exchange is stable and the GST increases, the revenue neutral price increase is likely to be 8%. I don't think that brands will take a full 8% increase in price if that comes. I don't think it's required as well. Anyways, the consumer offers now in India are much higher than the rest of the world, it can be lowered. I don't see a major impact in our sales up to $50,000. Apart from $50,000, we will also have options that we are in discussion with the brand should the GST come in. Now will the EFTA benefits be passed on? Of course, they will be passed on. There will be -- everybody wants to take India very, very seriously right now. Everyone is very bullish about the India market. I don't think the GST is a big dampener if it comes. And again, I want to highlight this is the fact that we are in discussion with -- having discussions with the right representatives of the government to also give our views on how it can be beneficial for the country to have a lower tax rate as it will increase tax revenues in the future, if and when it comes. I don't want to discuss more on this matter because it's not really out yet. It's just a group of ministers that have passed it on. Let's see if and when it comes.

Fair enough, Pranav. Thanks for the elaborate answer. I just wanted to check currently our inventory at what levels of CHF to INR conversion.

I don't -- see, it's a lot of different brands, right? So it's -- there's no one fixed rate as such because it's a basket of 60 brands. So I don't have that answer in a ready format. But realistically, you can go on the website and see. It's roughly just 1 or 2 -- maybe 3% or 4% lower on average. This is -- I'm just giving an average figure. There are many brands that are higher as well that don't even need that increase because the margin is already coming up higher than what is required.

Understood, Pranav. Second, just I wanted to also sort of understand, we have so far until October, I guess, open 12 stores, right, on a gross basis.

That is correct.

Yes. So the inventory and CapEx together is about INR 135-odd crores, right? So that amounts to about INR 11 crores if my calculation is right. So is it like in existing stores also some of these investments have been made or this INR 135 crores is entirely for these 12 new stores?

No, it's also the inclusion of new brands that were signed on in the last year going into more brands, like a brand like Louis Erard would have -- which we signed last year, whatever only 2 stores is going into new stores -- is going into new -- existing stores as a new brand. We have launched with Tudor now. Tudor, we are going to be with more points of sales. So that's going to be more points of sale that will open up for that is more brands coming into existing points of sale. So it's not all into new stores.

Okay. So that was initial guidance around...

Why don't you join back into the line or otherwise queue, from a time perspective, it's -- my request is if everyone can ask -- limit it to 2 or 3 questions at max and then come back into the line because I'm getting messages from the coordinators that we need to put -- follow that format. Yes. Thanks, Devanshu.

[Operator Instructions] The next question is from the line of Yash from Stallion Asset.

So just from the initial commentary, I wanted to confirm that you're seeing October month, you saw 47% growth Y-on-Y?

That is correct.

Okay. So that's -- I mean, it seems that you have a good momentum already. And how do you feel November and December will go through? Are you seeing more demand.

Look, I don't want to give those comments right now. I don't want to go into a monthly thing. All I can say is October was great. We feel confident about the future.

Sure, sure. And so just again on the GST, the hike that we've had. I mean what are the comments from the brand owner's perspective? I just wanted to check, you said something about up to 8% price hike. I wanted to get some clarification on that.

I think the comment from brands is that India will remain a focus for the future, and we have to figure out a way on the GST increase. The 8.5% is that if you want to remain at the revenue -- at the same revenue, right, net of taxes, you need to take an 8.5% price increase. But you don't need to necessarily take an 8.5% price increase. It can be a 5% price increase and a 3.5% decrease in discount or 3.5% born by the brand. So there are many combinations that are available. At this point of time, I don't -- this is all hypothetical talks. So I don't -- I'm not entertaining too much talk on this because when it happens, if it happens, then we will see and we will find a way. I remain confident of the ability of our management to be able to steer the company through this without changing our vision, without changing our 10-year vision.

[Operator Instructions] The next question is from the line of Ankush Agrawal from Surge Capital.

Firstly, I want to understand a bit about the ForEx impact. Sir, can you explain INR 4.65 crore that we have booked in Q2, where it's sitting exactly? Is it in other expenses and mostly in the cost of goods?

It will be in cost of goods and vendor margin that you will see the impact.

So Ankush, just to update on that. So there are 2 parts. One is where we have got the credit. So it's getting settled in July to September period. And secondly, whatever the payment we made during this quarter. So INR 2.34 crores is in the exchange fluctuation and the balance is in the cost of goods sold.

Okay. So 2-point something that you said, it is in other expenses, right?

Yes. That's correct.

Okay. Just one more clarification over here. The other expense it has increased Q-on-Q from say, about INR 31.5 crores to INR 39 crores. So what explains this sharp jump? I mean some bit of it is obviously rent, but other than that, was there something else during this quarter?

So Ankush, as Pranav mentioned in the earnings call, this year, we have added 12 boutiques. As of these boutiques are at advanced, we have just opened, the revenue will pickup over the period. So there is certain additional expenses on account of manpower and rental.

Okay. The next question I want to ask Pranav is, do you think that the benefit of EFTA and custom duty cut would flow into higher margins in H2? Or do you think a more realistic outcome would be that we would see benefit of the same flowing into gross margins from next year onwards?

EFTA hasn't yet started. So EFTA will start in the next year, it's not going to start this year.

Okay. So next year is where we would see that first impact.

That is correct.

[Operator Instructions] The next question is from the line of Vinamra Hirawat from JM Financial.

Sir, so congrats on a good set of numbers. You have guided for 13 more stores before the end of the year to be opened. Looking to FY '26 and beyond, now that we have stores in most of the large cities, multiple stores in some cities. Are we still seeing the same type of 20, 25 store openings as we expect to see in FY '25?

The opportunity definitely exists for that. It's within our -- there's a lot more that goes into just -- it's not just a location and the potential, we have to have enough manpower. The brands have to be tied in because they are multi-brand stores, each store takes in 20 brands, it takes time to bring it in. But is there an opportunity for the -- in the next 5 years, to open 20 stores a year, yes.

And I had a question on market share. Is there any data you have as to what's the market share of Ethos in the luxury watch market in India? And how are we insulating...

I have no factual data on this, no.

And how are we insulating ourselves from new or unorganized luxury watch sellers?

I think we are authorized and they are not authorized. That's the first one. And I think the difference is in several things. I don't want to go into the difference between unauthorized. I think our customers come to us before...

I said unorganized luxury watch sellers or new authorized watch sellers in the countries?

I'm going to ask Mukul, our Chief Operating Officer, to be able to answer that question. He can do a better job than I can for that answer.

I think there are multiple differences being organized player and unorganized player. I think our strength lies in, a, they have to get in terms of giving a customer a single experience across the country. So you can walk into any of our stores with any of the brands we represent and get servicing them across the country, a; b, we are also able to sell a large variety of brands, which we stock, which nobody else has got in the country; c, we've got a very potent and significant marketing muscle, which operates only if we have got scale. That works to our advantage. We've got 250,000 in the Instagram followers. We get around 60,000 visits to our website. All of those help in terms of building out our entire differentiation with us, right? Beyond that, we've got our entire customer service team, we've got concierge service. So a bunch of differentiator which play towards why customers chooses Ethos as its first and primary choice when it comes to buying a luxury watch.

The next question is from the line of Kalpit Narvekar from EFG Asset Management.

So I guess it's partly answered before, but just to kind of get some color on this. So essentially, the duties that the government is talking about from 18% to 28%, which is 10% kind of impact. So just on 2 points, right? One is from a demand elasticity perspective. The people who buy the luxury watches, et cetera. I mean does it really impact if you kind of straight up pass-through these hikes from a demand elasticity perspective? And the second thing is also there was kind of potential of margin expansion from this Swiss duty cuts, right, over the medium term. But it seems like at least a part of that margin expansion will be reversed because of the duty GST hike, right? So what are you thoughts on these 2?

I think that, look, the GST -- on the GST matter, I think it's better that we comment if and when it happens. I think elasticity and inelasticity of luxury products, I think, is well known I don't want to comment on what will happen, what could happen if and when -- when it happens, we will see what happens. I know our -- I know the strength of our management lies in its resilience, and we have always been able to work through regulatory changes and add value for all our stakeholders. I think we are in discussion with the regulators, with the government. And when it happen and if it happens, we'll talk about it then. In terms of EFTA, I think the EFTA is a groundbreaking agreement, it will reduce customs duty, and it will impact our bottom line in a positive manner. It will open up the market for Switzerland, and I do not believe that our vision will change or our goals -- for our long-term goals will change due to any of the changes that perhaps may be spoken about.

And one more question from my side, right? So you spoke about like October being very strong, is it like 40% plus or something to it. So like are you seeing this growth driven by more from SSG pickup? Like has the SSG 15% pickup in the comp and you expect that to kind of continue in the second half and FY '26, like SSG pickup potentially?

Look, I think that all I want to say is that October was a great month. We grew by 47%. H1, it was 15%. The volumes are fantastic. The mix of growth, the quality of growth is fantastic. I'm happy with the direction that we are taking. I don't want to go into what will happen in November and December and Jan. I have already mentioned what's happened in the past, I think it's -- and that's the best way to leave it over there.

The next question is from the line of Harsh Shah from Bandhan AMC. [Operator Instructions]

So Pranav, I just wanted to know the progress on RIMOWA, right? And where do we see this vertical growing in, let's say, over the next 3 to 5 years here. And also in this space, right, of this luxury lifestyle retailing, we have RIMOWA and Messika. And I mean if you could talk about the progress or the steps you are taking to kind of ensure or to get more brands, right? So what is the process and how long is the gestation period or the negotiation from the brand? And what kind of segments are we focusing on, right, going ahead, let's say, over the next 3 to 5 years. So your comments on that is well, please.

Thank you for that question. RIMOWA, as you know, it's -- we are just about celebrating one year of us opening the boutique. It's been a fabulous experience. It's the first time that we did a boutique outside watches. It's one of our most profitable boutiques. We are going to be expanding that business. In my opinion, over the next 5 years, we are going to at least target an 8 to 10x increase in the business of just RIMOWA itself. We have more brands in the luxury luggage category also coming in, in the future. Perhaps they're not as well known as RIMOWA, but in the next quarter, we will be announcing a few of those as well. In terms of Messika, as you know, we had earlier a boutique, we had -- sorry, we had no boutique. It was a part of one store, one watch boutique that we did as little pop-up inside it. It was incredibly -- we had incredible results, very encouraging, and that's when we've decided to go into a full boutique. The full boutique launch will take place in February. I am sure it will be a flying success, and we hope to open 8 to 10 boutiques more of Messika in the next 5 years. This requires us to create the first proof of concept. And then our real estate team needs to work very closely with the team in Paris to ensure that they have the right locations and that both Messika and Ethos also feel comfortable in opening these boutiques, but I am confident that our entry into the international jewelry sector, which will happen in February will be a flying success and will open several doors for us in the future. As you know, the size of the jewelry business is significant, and it's something that we want to take small but calculated and yet steady steps into. Talking about other brands. We are in discussion with large marquee brands. I will be traveling in this quarter, again, in Europe to have further discussions. These brands typically have 12 to 15 months, let's say, gestation periods before boutiques are open. Those discussions have now started. They are into the high luxury segment, both fashion and accessories. They are some of the greatest brands that have been built in luxury. I do not want to take names into it, but it is something that we are working towards building it up. Whether it will happen, when it will happen, we don't know yet. These are -- I don't want to give any firm date until we have contracts signed. All I can say is that we are working steadily towards bringing marquee brands into India. And our view has been that we know the luxury customer. We know the luxury brand. We know the stakeholders in luxury, and we believe we can do a fine job in bringing luxury brands and serving the aspiration of the Indian customer.

Got it. And just one follow-up there. In terms of team, right, while it's the watches business...

I can't hear you, it's sounding as if your mumbling, you will need to be closer into the phone.

Okay. Sorry. Am I audible now, properly?

Yes, now I can hear you.

Yes. So just a follow-up there, Pranav, basically in terms of team, right, now that, probably we are expanding in this luxury lifestyle retail as well apart from watches in RIMOWA, Messika and other brands as well. How do you think about developing a team there separately because, again, we are in incubation phase, talking to many brands there. So how is that in place there?

I think, look, any diversification, whether it is -- even though it is connected with the luxury team, it requires, of course -- to do a good job. It requires the best team. And I'm sure we'll be able to integrate and add to our existing team to be able to build that structure out. Of course, we are thinking about how we're going to structure this in terms of manpower, in terms of reporting, et cetera, et cetera. But I think that those are discussions that are internal and we'll be able to solve it -- we'll be able to solve for it just as we have for RIMOWA and Messika. As more brands continue to come in, we will continue to strengthen both the HR structure and all the infrastructure around it to be able to ensure that we make the lifestyle division a flying success.

The next question is from the line of Manish Poddar from Invesco Asset Management.

I just have 2 questions. First one was how is, let's say, the traction for Favre Leuba and just what is the go-to-market plan now with this -- are there certain benchmarks or, let's say, time lines, one should think, let's say, X number of post by the end of this year. Just in terms of go-to-market and how is the initial acceptance or reactions?

So Favre Leuba hasn't launched in India yet. Favre Leuba is launched globally. The team -- or the Silvercity team has informed me that it was a flying success in Geneva. They said that they have interest from around the world. The manufacturing is taking place. Remember that in Geneva, it was a product showcase, so we were showing the -- or the Silvercity team were showing the -- the Silvercity and Favre Leuba team was showing the watches to media and to possible potential partners around the world. These potential partnerships are taking place as we speak. The launch in India will be in January on 10th of January, there will be a launch at the Swiss Embassy, on 11th of January is another launch with at the Formula One circuit, celebrating motor cars and the association of Favre Leuba with it, and we have, from 12th of January onwards, the watch -- Favre Leuba watches will be available across 40 boutiques in India, along with a strong digital marketing campaign, which will start at that time.

So any sense on how is the broader acceptance or, let's say, I'm not sure if the pricing, which was shown at the Geneva show, I'm just trying to kind about -- how is the product acceptance and pricing of the kind of being accepted at the level and just in terms of the brand and channel partners acceptance. Just any thoughts around that?

I mean what I can tell you is that there's already preorders, which is for January taking place. We already have 3 orders of more than CHF 100,000 already at zero discounts. There is retail acceptance from around the world. Retailers are accepting it. There is -- the common theme is great value for money, great design, great heritage. And I feel confident that the Silvercity and the Favre Leuba team in Switzerland will do a very good job of establishing the brand. It's why we are proud to be taking the brand into Ethos as well.

Okay. And just one small clarity.

[Operator Instructions]

Let just do this last question and then we can -- Manish please go on.

Yes. So have you started keeping jewelry in the Ethos store also? Just some clarity, I thought I've seen one of the social media...

Manish, it was a pop-up that we did to check the -- to do a dipstick and check how it's performing. We did that with Messika in one of our boutiques, and we did it with BVLGARI in our boutique in Hyderabad. So it's only 2 boutiques that we tried it in.

How is the feedback?

Very good. We want to focus on to jewelry through a jewelry boutique. Later in the future, we may return to that. But right now, it is that we want to establish boutiques first.

The next question is from the line of Akhil Parekh from B&K Securities.

My first question is on the return on capital employed as we expand more and more into Tier 2 cities, I believe our sales throughput in stores in Tier 2...

[Operator Instructions]

Sorry, we are not able to hear you because there's just too much noise from the back.

Is it better? Hello.

Yes. It is better now.

Sir, my first question was on the return on capital employed. As we expand more into Tier 2 cities, I believe the sales throughput won't be similar to what we see in Tier 1 cities, basically. So is there a differential between the return on capital employed at the stores in Tier 1 versus Tier 2 cities?

I don't -- we don't really see too much of a difference right now, the capital requirements and the expenses are lower in Tier 2 cities, but so is the -- the sale is also taking time. So it's hard to say right now, but ultimately, I believe it will equalize and roughly be the same.

Okay. And second and last question, again, on the stores opening in Tier 2 cities, like how do we ensure the quality of servicing remains consistent as we expand further into Tier 2 cities? What are some of the steps possibly which company is taking to maintain the service quality?

Mukul, the Chief Operating Officer, will take this question.

I think the first thing which we're doing is, obviously, all of them are run by company personnel. We have got a 15-day intensive program in which each and every new employee goes through our 15-days intensive training program, post which we've got a certification program. We've got 4 levels of certification, which happens over the employee’s tenure in the company. So this is something which all our frontline members go through. Besides that, we've got standardized templates for our stores in terms of the way, the look and feel is. We've got central teams, which manage that. We acquired central call centers to manage any customer complaints. So all in all, this ensures that we have got a standardized experience for our customer.

The next question is from the line of [ Sourav Mondal ] from RK Advisory.

So my question is on secondhand segment. So what is the growth in this quarter? And if you brief me about share in the revenue of secondhand quarter -- Sorry, secondhand segment and revenue.

Just give us a moment to take out the numbers. We had the numbers for H1. The YTD number is 33.6% growth in the pre-owned sector. And it represents -- so -- sorry, just wait a second.

Yes. So in April to September, first half of the year, the overall revenue is INR 43 crores, a billing of INR 42 crores against INR 32 crores in the same year-on-year basis. The overall growth is 33%. And as Pranav mentioned in the call, it's picking up very well, and we are foreseeing 20% growth in the objective year also, in the remaining year.

So my next question is, is the median selling price close to average selling price, or it is lower. And another one, if you give some color on the management expected SSG so next 2, 3 years.

I think our -- as I mentioned, our SSG has been 15% in the last -- 15.5% in the last 6 months. We have our goal of getting our overall revenue up and our overall business was 10x in 10 years. I think it will be a healthy mix of same-store growth and new store addition.

And what would the -- I asked about median selling price. So is it close to average selling price or it is lower?

I don't have that piece of data right now. I think we'd like to circle back to that. I know our average selling price has been -- our average selling price is INR 2.15 lakh. I don't have the median -- I don't have the median right now, but it's going to be lower.

So average selling price grew from INR 1.87 lakh to INR 2.16 lakhs in H1.

The next question is from the line of Ankush Agrawal from Surge Capital.

Just a clarification. So we added 5 stores during the quarter? And did we close in stores this quarter or the 2 stores closed in October.

How many store additions, was that...

We added 5 stores in Q2, right? Gross?

We've added 12 stores in H1.

Yes, I was trying to understand the store count as of Q2 end.

So last year, we closed at 62 stores. And in Q1, we added 3 stores, Q2, 5 stores. So total store is 70. And out of which 2 stores are closed in this quarter in Q2. And as of now, the total store count is 72. In October, we opened 4 stores. And the 2 that are shut down, they're not shut down. They have been -- 3 stores have been combined into 1 store. So therefore, the store count will come down, but the overall revenue will increase in this case. We are combining 3 different boutiques into 1 boutique in a location. This is under renovation right now.

Mr. Agrawal, are you done with your question? There seems to be no response in the current participant. We'll move on to the next question, and that will be our last question from the line of Yash from Stallion Asset.

Just 1 question. So irrespective of the fact that we get the tax hike or we will be able to maintain a gross margin of 30%?

Sorry, irrespective of what?

Of the GST, price hike, I mean, you said that it's still uncertain. I mean we don't know how it's going to play out, but I just wanted to understand if the gross margins of your company can be maintained at 30%.

I do believe that, again, as I mentioned, I don't want to go into something that is when and if it happens, I'm sure our management will make sure that our 10-year vision doesn't change. I can't comment about what will happen in the quarter or 2 quarters. Overall, yes, I think we will be able to maintain and grow those margins.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.

Thank you, everyone, for your time today. I trust we've addressed all your questions thoroughly. Moving forward, we will be hosting our earnings conferences half-yearly. Should you need any additional information or clarification about the company. Please contact the SGA team, our investor relationship advisers. Thank you very much for being on the call today.

Thank you, members of the management team. Ladies and gentlemen, on behalf of Ethos Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.