Undertaking an Initial Public Offering (IPO) is a major decision for any company, as it can have significant implications for its future operations and growth. Recently, BoAt, a renowned consumer electronics brand, announced the withdrawal of its IPO, which has led to much speculation about its future prospects and how this move could impact its unlisted shares. In this context, it is important to delve deeper into the reasons behind BoAt’s decision to withdraw its IPO and analyse how this development may influence the company’s share price going forward.
Reason Behind Why BoAt Withdrawal Its IPO
BoAt, an electronics brand based in Mumbai and operating under Imagine Marketing Ltd., has decided to cancel its plans to withdraw its IPO because of unstable market conditions. The company filed for an IPO on January 26th, 2022, with the aim of raising approximately ?2000 crore. However, instead of going public, BoAt has opted to raise ?500 crore through a private placement, issuing preference shares to its existing shareholder, an affiliate of Warburg Pincus, and a new investor for BoAt unlisted shares, Malabar Investments.
Therefore the other reason behind delaying their IPOs due to financial strategies and low valuations. Companies like Zomato and Paytm have witnessed a drop in their stocks post-IPO, causing negative trends. High OFS rates and financial mismanagement are also part of the problem. The decline in IPO value is not just limited to India but is also a worldwide phenomenon due to economic factors. Hence, companies are opting to postpone their IPOs for better times.
Future Plans Of BoAt Withdrawal After IPO
BoAt, an audio products company that has been making waves in the industry, has recently announced its decision to venture into the smartwatch market. The move is strategic, as the company’s co-founder and Chief Marketing Officer, Aman Gupta, has expressed his intentions to establish BoAt as a global leader in the smartwatch category. Aman has drawn inspiration from BoAt’s successful digital playbook, which he also aims to replicate in the smartwatch segment.
BoAt’s expansion plans include ramping up local manufacturing capacity in India. The company is also looking to expand domestic and international channels to reach a wider audience. While there were earlier plans for an IPO, the company has decided to postpone it for 12-18 months in a bid to focus on its smartwatch venture. Despite this, BoAt remains an up-and-coming player to watch out for in the audio and smartwatch market.
Now that we understand why the IPO was withdrawn, it’s essential to address the question that investors often ask: what will be the impact on BoAt unlisted shares, and should investors consider investing in them? So let’s discuss it in the next section.
Should Investors Invest In BoAT Unlisted Shares
According to the RedSeer Report, the wearables market in India has grown significantly from ?99 billion in 2018 to ?170 billion in 2020, with a Compound Annual Growth Rate (CAGR) of approximately 31%. The market is expected to continue growing between 25% to 35% in the next five years and is anticipated to reach between ?515 billion and ?765 billion by 2025.
In addition, the report states that the wearables market in India grew from ?16 billion in 2018 to ?32 billion in 2020, with a CAGR of approximately 39%. The IT services sector is projected to continue growing at a CAGR between 40% and 55% over the next five years. It is estimated to reach between ?170 billion and ?275 billion by 2025.
As a result of this growth, BoAt has expanded its business and become one of the most popular wearable companies. Its products are in high demand, and investing in BoAt unlisted shares is considered wise. To further understand the company’s financial performance, let’s take a look at its financial graph.
| Particulars | 2022 | 2021 | 2020 |
|---|---|---|---|
| Sales | 2873 | 1,314 | 609 |
| Purchases of Stock-In-Trade | 2592 | 1,255 | 492 |
| Changes in Inventories | 245 | -234 | 42 |
| Employee Benefits Expense | 56 | 15 | 6 |
| Other Expenses | 341 | 151 | 77 |
| Operating Profit | 129 | 127 | 76 |
| OPM % | 4.49% | 9.67% | 12.48% |
| Other Income | 14 | 7 | 0.85 |
| Interest | 35 | 12 | 10 |
| Depreciation | 9 | 3 | 1 |
| Profit before tax | 99 | 118 | 65 |
| Total Tax Exp. | 30 | 32 | 17 |
| Net Profit | 69 | 87 | 48 |
| NPM % | 2.5% | 6.62% | 7.88% |
| No. of Equity Shares (Before IPO filing) | 13.54 | 13.54 | 13.54 |
| EPS in Rs | 6.9 | 8.7 | 4.8 |
Final Words
BoAt, at present, has yet to reach a conclusive decision on the possibility of pursuing an initial public offering (IPO) or when such an event may take place. Nevertheless, the company has communicated that it is a prospect they are contemplating and may pursue in the future when market conditions are optimal, and investor interest has heightened.
