It seems to be the IPO festive season. Several startups, as well as established business houses, went for an IPO in a short period. Investors had a dream run with some of them. Another company is joining the race too.
Delhi-based electronics giant boAt lifestyle recently announced its initial public offer (IPO) plans. Estimates suggest that its brand value will likely touch the $1.5 billion figure after the IPO. For many years now, the boAt has been a household name operating in the audio devices segment. In January, it informed the Securities and Exchange Board of India (SEBI) of its intentions of bringing the IPO.
The company expects its business to grow around five to six times. So, many of you might be looking forward to the boAt IPO. We shall discuss the details here. However, let us first take a look at its market competitiveness.
Overview of boAt
Founded in 2014, boAt soon became a significant player in the multimedia accessories segment. The brand’s parent company, Imagine Marketing, was one of the earliest Indian companies to offer such electronic devices. The company offers an attractive range of earphones, speakers, smartwatches, data cables and chargers, etc. Due to its lifestyle-centric approach, it became a prominent player in the Indian digital accessories market. The brand sells products at affordable price points—some of the significant boAt strengths. These are—
1.Largest digital-first company: revenue from operations of boAt made it a leading brand in the financial year 2021. Unique products suiting the lifestyle in this digital age attracted many consumers. Younger generations who shop primarily online found the products handy. At the end of the second quarter, on September 30, 2021, it positioned itself as the number one wireless audio device brand. As per RedSeer Report. It ranked first in both terms of value as well as volume. In the smartwatches segment, it stood second in the rankings. Its smartwatch sales occupied a market share of 48% in terms of volume and 23% in terms of value. Sales of boAt’s products are constantly rising on ecommerce platforms like Flipkart and Amazon.
2.Robust financials: Some investors are optimistic about boAt’s IPO because of its strong financial position. boAt’s revenue for the fiscal year of 2020-2021 saw a considerable jump reaching Rs.1500 crore. In the same period, the company’s profits soared to Rs.78 crores. It is a ten times increase in the company’s overall profit. The earphones category only witnessed a massive year-on-year (YOY) growth of 118.2%. As per the data collected by the International corporation, In the April to June quarter, boAt shipped 11.2 million units. The growth in other digital products is also quite noteworthy. Wearables such as smartwatches have a market share of 14.05%, which was just about 0.1A% earlier.
3.The earnings before interest (EBITDA) also increased from Rs. 141.40 million in the financial year 2018-19 to Rs.1344.77 million in 2021. So, the gross adjusted EBITDA margin was 10.24%. Operating returns on capital employed and earnings per share were at 56.03% & 8.53%, respectively. These are outstanding figures for a company.
Details of the IPO
As you now have a good idea of boAt’s background, let’s see what its IPO offers.
The present shareholding pattern is as follows.
founders Aman Gupta and Sameer Mehta with 28.1% of shares each
Warburg Pincus, a subsidiary of American company South Lake with 36.2% shares
3.7% of Fireside Ventures
2.6% of Qualcomm
Other minor shareholders have 1.3% shares.
A few months ago, the company raised around Rs.800 crore from Warburg Pincus and Qualcomm. The boAt is looking to infuse about Rs. 2000 crore in the company to expand its footprint in the electronics market. Its current valuation stands at Rs.2200 crores. Warburg Pincus is looking to divest around Rs.700-800 crore worth of shares in this IPO. It will have fresh stock and an Offer for Sale (OFS). The founders will sell a small portion of their respective holdings. Now there are 95,815,500 Equity Shares. Post the IPO; this number will come down to 135,453,500. The boAt will use shares worth Rs. Seven thousand million to repay or prepay its debts.
The offer consists of the following three parts.
1.Fresh issue- Equity Shares with an aggregate value of Rs.9000 Million
2.Offer for sale- Equity Shares aggregating up to Rs.110000 Million
3.The portion reserved for employees – Equity Shares of Rs.15 Million in value
Hence, the net offer stands at Rs.19985 Million.
The Qualified Institutional Buyers portion will have separate reservations for anchor investors and mutual funds. Mutual funds can get up to 5% of Net QIB. The company allocated non-institutional and retail portions too.
Invest in boAt IPO
If boAt’s performance and financial prospects convince you to participate in its IPO, use the best stock market app for this purpose. Investing in IPOs doesn’t necessarily require a Demat account. Just download the Kotak Stock Trading App on your phone. Here’s a quick guide for you.
After downloading, create an account.
Then, enter your user ID and password to log in.
Go to the IPO section and click on place order, followed by primary market and IPO.
Select ASBA or Non-ASBA and choose an IPO.
Mention the quantity and place the order.