01 — At a Glance
A Company In The Throes Of An Identity Crisis
- 52-Week High / Low₹3,351 / ₹2,067
- Q3 FY26 Revenue₹596.7 Cr (Consolidated)
- Q3 FY26 PAT₹38.3 Cr (Down 18.8% YoY)
- TTM EPS₹67.6
- Annualised EPS (Q3)₹74.76
- Book Value / Share₹851
- Price to Book2.58x
- Operating Profit Margin11.1% (Down from 13.5% YoY)
- 3-Year Sales CAGR26.4%
- 3-Year Profit CAGR43.6%
The Paradox: KDDL has built two fundamentally incompatible businesses under one roof. The manufacturing side (Taratec, Eigen) is a lean, profitable, high-margin cash cow. The retail side (Ethos) is a high-growth, margin-crushing, cash-eating machine currently opening stores like a franchisee on steroids. Revenue up 26.4% QoQ, but profit down 18.8% YoY. You can get fat and healthy at the same time, apparently — just not in this kitchen.
02 — Introduction
The Swiss Watch Hand In An Indian Retail Glove
Imagine a precision engineer walking into a luxury fashion boutique and saying, “I’m running this place now.” That’s KDDL Limited in 2026. Founded in 1981 as a watch components manufacturer, the company spent four decades perfecting the art of making watch hands and dials for global luxury brands like Swatch, Tag Heuer, Gucci, and Breitling. It was profitable. It was boring. It paid dividends. Everyone was happy.
Then in 2003, management decided boring was beneath them and ventured into retail luxury watches through Ethos Limited. That was 22 years ago. Today, Ethos operates 73 stores across 26 cities, sells everything from ₹2 lakh watches to ₹50 lakh timepieces, and has single-handedly transformed KDDL from a B2B manufacturing company into a retail conglomerate cosplaying as a manufacturer.
The Q3 FY26 results tell the story of two businesses fighting for supremacy. Standalone manufacturing revenue grew 19% but margins compressed. Consolidated numbers grew 26.4% but profits fell 18.8%. The retail expansion is hungry. Very hungry. In the words of management on the recent investor call, Ethos is opening stores “aggressively” and this is “a conscious investment in growth.” Translation: profitability is on ice while we play Monopoly with luxury real estate.
The Math That Doesn’t Math: Ethos sales grew 25% in FY2025 with high single-digit margins. KDDL manufacturing had margin issues due to Swiss watch demand headwinds. Add in capex for new packaging facilities, new watch bracelet plants, and the massive Favre-Leuba brand acquisition in 2023, and suddenly a 26% revenue growth year has negative leverage on profitability. This is what happens when you try to be both Rolex and Reliance.
03 — Business Model: Two Engines, One Transmission
Manufacturing Excellence Meets Retail Mayhem
KDDL’s business is split into two universes. The first is Precision Manufacturing & Watch Components, operating under the brands Taratec and Eigen. This division manufactures watch dials, hands, indexes, and bracelets for the global luxury watch industry, with major clients across Switzerland and India. Revenue is ₹369.6 Cr annually (standalone), operating margins hover around 18% when things are normal, and it’s about as exciting as watching paint dry on a dial.
The second universe is Luxury Watch Retail, where Ethos Limited (50.11% owned by KDDL, with 49.89% publicly traded) operates 73 luxury watch stores. This is where the romance happens. Customers walk in, spot a Patek Philippe, lose their mind, and walk out ₹20-40 lakh poorer. Ethos also operates in certified pre-owned watches and luxury lifestyle products. Growth? Spectacular. Margins? Margins are for companies that don’t reinvest every rupee in new real estate.
The consolidated picture mixes both. Q3 revenue was ₹596.7 Cr. Around 76% came from retail (Ethos and related), 24% from manufacturing (Taratec, Eigen, and others). The problem: retail is profitable but low-margin (6-8% net), while manufacturing is high-margin but facing cyclical headwinds from Swiss watch demand slowdown.
Watch Components~18%of revenue mix
Retail (Ethos)~76%of revenue mix
Stores Operating73as of Q3 FY26
Precision Eng.~6%of revenue
Fun fact: KDDL and its WOS hold 50.11% of Ethos. The other 49.89% is publicly traded and trades at multiples suggesting the market values Ethos roughly at the same market cap as KDDL itself. This is the tail wagging the dog, except the tail has better growth, the dog is older and grumpier, and everyone’s confused about which one to own.
04 — Financials Overview
Q3 FY26: The Decompression Year Begins
Result type: Quarterly Results (Q3 FY26) | Q3 Consolidated Revenue: ₹596.7 Cr | Q3 Consolidated PAT: ₹38.3 Cr | Annualised Q3 EPS: ₹74.76 | Note: Consolidated PAT declined 18.8% YoY despite 26.4% revenue growth.
| Metric (₹ Cr) — Consolidated |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 596.7 | 472.0 | 516.7 | +26.4% | +15.5% |
| EBITDA | 101.4 | 89.2 | 86.3 | +13.7% | +17.4% |
| EBITDA Margin % | 16.5% | 18.9% | 16.7% | -240 bps | -20 bps |
| PAT (After Minority) | 24.0 | 30.7 | 22.1 | -21.8% | +8.6% |
| EPS (₹) | 18.69 | 26.10 | 15.75 | -28.4% | +18.6% |
The Margin Squeeze: Here’s what’s actually happening. Revenue grew 26%, but EBITDA margin fell from 18.9% to 16.5% — a 240 basis point hit. The culprit? Ethos store expansion costs. Management noted on the concall that new store initial setup involves “initial investments in manpower, rentals, and promotional activities.” Older stores do 15-18% margins. New stores do 5-8% for the first 2-3 years. When you’re opening stores like a madman, the blended margin compresses. Math isn’t lying — the business is just subsidizing growth.
Standalone Story Is Different: At the standalone level (manufacturing), Q3 PAT was ₹30.4 Cr, up 88.5% YoY. But this included an ₹18 Cr dividend from subsidiary Mahen Distribution. Stripping that out, operational PAT was ₹12.4 Cr — essentially flat. Watch components exports are under pressure due to global luxury slowdown. This isn’t rocket science — Swiss watch exports are down, so demand for dials and hands is down.
05 — Valuation: Fair Value Range
Paying 32x P/E for a Company That Doesn’t Know What It Wants To Be
Method 1: P/E Multiple Approach
TTM EPS = ₹67.57. Current P/E = 32.1x. Peer median for jewellery/luxury retail is 19.6x. Manufacturing businesses in this segment trade at 15-18x. KDDL is being priced as a high-growth retail play (Ethos), but earnings power is being dragged by cyclical manufacturing headwinds.
Conservative multiple (manufacturing focus): 18x × ₹67.57 = ₹1,216 | Aggressive multiple (retail focus): 24x × ₹67.57 = ₹1,621
Range: ₹1,220 – ₹1,625
Method 2: Price to Book Value
Book Value per share = ₹851. Current P/BV = 2.58x. Retail jewellery companies trade at 1.8-2.2x P/BV. Manufacturing businesses trade at 1.5-1.8x. KDDL at 2.58x is at the premium end, justified only if Ethos high-growth narrative continues to pan out.
Conservative P/BV: 1.8x × ₹851 = ₹1,532 | Fair P/BV: 2.1x × ₹851 = ₹1,787
Range: ₹1,530 – ₹1,790
Method 3: Hybrid Approach (Blended EPS Growth)
Assuming 15% CAGR earnings growth over 3 years (down from historical 43.6% due to margin compression), fair value range implies a 20-22x forward multiple on estimated FY27 EPS of ~₹75-80.
Conservative: 20x × ₹75 = ₹1,500 | Optimistic: 22x × ₹80 = ₹1,760
Range: ₹1,500 – ₹1,760
Consolidated Fair Value View: Across all three methods, fair value consolidates around ₹1,400–₹1,750 per share. The current price of ₹2,195 is trading at a 25-35% premium to this range. This premium is justified only if you believe: (a) Ethos will achieve 20%+ net margins eventually, (b) Manufacturing headwinds are temporary, and (c) The Favre-Leuba acquisition will unlock value. All three are possible. None are certain.
⚠️ EduInvesting Fair Value Range: ₹1,400 – ₹1,750. This fair value range is for educational purposes only and is not investment advice. Market multiples can sustain above fundamental values for extended periods based on growth narrative. Please consult a SEBI-registered investment advisor before making any financial decision.
06 — What’s Cooking: Triggers, Opportunities & Landmines
The Ingredients For a Comeback (Or a Disaster)
