As we look ahead to 2027, India is poised to see a remarkable rise in the number of high-net-worth individuals, with an estimated 19,000 people expected to have a net worth exceeding 200 crores. This surge represents a 65% increase in the number of millionaires over the next three years. But what does this mean for businesses and investors?
The impact of this wealth growth will reverberate across various sectors, particularly in the luxury and premium brands market. By 2027, the luxury market in India is projected to reach a staggering market size of 82,000 crores, with earnings expected to grow at a compounded annual growth rate (CAGR) of 22%. This presents a significant opportunity for investors to capitalise on the burgeoning luxury segment.
Two companies poised to benefit greatly from this trend are Aditya Birla Fashion and Ethos Watches.
Aditya Birla Fashion:
Aditya Birla Fashion has made strategic moves to position itself in the high-end luxury segment, most notably with its recent acquisition of The Collective. This acquisition has allowed the company to partner with prestigious brands such as Ted Baker, American Eagle, and Ralph Lauren, while also securing stakes in renowned designers like Sabyasachi and Masaba. However, the company’s aggressive expansion through acquisitions has resulted in a substantial debt burden, with a debt-to-equity ratio of 0.8% in 2023. While the company has immense potential, it may face short-term challenges as it navigates its debt obligations.
Ethos Watches:
Ethos Watches has established itself as a dominant player in the luxury watch market by partnering with esteemed brands like Omega and Rolex. With a market share of over 49%, Ethos Watches has demonstrated a strong growth trajectory, boasting a five-year CAGR profit of 72%. Unlike Aditya Birla Fashion, Ethos Watches maintains negligible debt, positioning it favourably for future growth opportunities. The company is poised to expand its portfolio by forging partnerships in the jewellery and luggage sectors, further solidifying its position in the luxury market.
