Has boAt Found Its Rhythm Again?

When boAt first floated its IPO plans in September 2021, it was aiming to raise close to INR 3,500 Cr. The plan was shelved eventually as market conditions soured. The Aman Gupta-founded company was loss-making then, its dependency on imports was too heavy and global markets were about to tumble after the highs of the zero interest rate fiscal policy. 

Earlier this week, when boAt filed its pre-IPO papers again, it came with far more tempered expectations. The electronics maker is looking to raise INR 1,500 Cr from the market, and more importantly, it is a business that’s trending towards profitable growth.

Like many other new-age listings, boAt is coming to terms with market reality — much like Urban Company and Lenskart before it. The profitability is certainly a notch in its cap. 

What were the key decisions that led the company to this point? And can the streak of profits continue after the listing?  

boAt’s Make In India Journey

boAt began as a consumer audio brand in 2015, offering affordable wired and wireless earphones, headphones, and speakers. Over time, it diversified into smartwatches, chargers, trimmers, power banks, and other small electronics. 

Having built its base and early scale through imports from China and Vietnam, boAt’s focus in the past three years has been on increasing its domestic manufacturing presence, and becoming a leaner company. This has been a key strategic decision that has led to profits. 

It was only after the pandemic that boAt realised it was overburdening itself with SKUs. Operating in a price-sensitive market like India meant that boAt had to cater to the masses with multiple SKUs. The import-reliant business could only have worked if boAt showed enough sales volume. 

But as competition grew and as the SKU build-up resulted in quality issues and counterfeits, boAt was forced to rethink its approach. It decided to shed the number of products it offered and focussed heavily on localisation of the components used in its products and domestic manufacturing. 

In 2022, about 90% of its products were imported, and as of FY25, around 35% of boAt’s total products were assembled in India, with a target to reach 50% by the end of FY26.

Driven by local sourcing and lower logistics costs involved in domestic manufacturing, the gross margin also improved from 22.6% in FY23 to 29.23% in FY25. EBITDA margins swelled up from 2.7% in FY23 to 4.64% in FY25. As a result, boAt finished the past fiscal year with positive cash flow from operations of INR 441.5 Cr in FY25 from a negative INR 18.1 Cr in FY23. 

Between FY23 and FY25, boAt had to suffer a bit. The upfront cost of setting up domestic manufacturing pushed the company deeper into the red. Revenue also declined as the company drastically reduced its SKUs across categories.

But the outcome after two years of cutting back is improved unit economics, which one hopes boAt will carry forward after its listing.

Shedding The Wearables Weight

As indicated above, a key part of the overhaul since FY23 has been the reduction in the number of products or unique SKUs being sold by boAt. 

Audio has always been boAt’s flagship category, but in 2020, as the smartwatch trend picked up, the company diversified. 

The idea was to replicate what it did with audio — import affordable ODM-made wearables from China and Vietnam — and sell them at aggressive price points to India’s mass market.

It initially worked as intended. The addition of smartwatches provided a strong boost to boAt’s overall portfolio. The company even acquired Singapore-based KaHa in FY22 for $40 Mn to strengthen its software design and user experience for wearables. 

Wearables allowed boAt to double its revenue to INR 2,872.9 Cr in FY22 from INR 1,313.8 Cr in FY21. In particular, wearables brought in INR 515.5 Cr in revenue in FY22 a jump of 841% compared to the previous year. 

The momentum carried into FY23, and revenue from wearables climbed to INR 901 Cr, contributing roughly 27% of the top line that year. For a brief period, it appeared boAt had successfully built a second growth engine beyond audio.

But this optimism didn’t last long. 

The wearables business began to collapse as the market was flooded with alternatives. Revenue from this segment fell from INR 901.5 Cr in FY23 to INR 550.2 Cr in FY24 and further to INR 330 Cr in FY25. In just two years, the category lost nearly 63% of what it was bringing in.

The decline, however, wasn’t unique to boAt, as it was an industry-wide correction. Industry analysts attribute the slowdown to multiple factors, including the influx of ultra-low-cost, unbranded smartwatches, as well as the entry of bigger players into the affordable category.

This impacted premium and mid-tier smartwatch brands like boAt, which operated on thin margins. They found themselves squeezed between pricing pressure and rising acquisition costs. 

While boAt’s audio business continued to grow modestly during this period — from INR 2,350.8 Cr in FY23 to INR 2,586 Cr in FY25 — the growth was not enough to offset the collapse of the wearables vertical. 

 

Over the last two years, boAt has scaled down its wearable business and discontinued multiple SKUs. 

In FY25, boAt is back to basics — audio once again accounting for around 84% of the company’s total revenue.

The management expects this steadiness to reflect in the operating revenue and margin efficiency. 

Navigating Stormy Markets 

The other part of the equation is lower advertising and promotional expenditure. The metric was down nearly 9% in FY25 from INR 427.6 Cr in FY23.

In this context, boAt cut back on high-cost campaigns such as IPL sponsorships and celebrity tie-ups. It also claims to have automated several internal processes to streamline operations and enhance productivity. 

But several structural and competitive risks persist that boAt must navigate carefully.

The first is the intensifying competition. While boAt continues to lead the Indian audio accessories market, holding around 26% value share and 34% volume share as of FY25, the landscape is rapidly changing. 

Global players, including Nothing, Realme and OnePlus are increasingly eyeing the budget and mid-tier segment. Meanwhile, domestic rivals like Noise, Mivi, GoBoult, and a rising tide of Chinese brands and reputed brands like JBL, Sony, Jabra and others are also eroding boAt’s brand recognition. 

This pressure is especially pronounced in tier II and tier III markets, where the bulk of new demand is coming from. As disposable incomes stagnate and discretionary spending weakens, consumers are trading down from mid-tier to entry-level products, intensifying price-based competition. Simultaneously, unbranded local alternatives are eating into the same customer base. 

The second big risk is channel concentration. Despite efforts to expand offline, boAt remains heavily dependent on online sales. 

Offline contribution rose only modestly — from 27.7% in FY23 to 28.4% in FY25. This also means that nearly 70% of sales still flow through ecommerce platforms such as Amazon and Flipkart. 

While these marketplaces have helped boAt scale rapidly, the dependence comes with trade-offs like limited pricing control, deep discount cycles, and exposure to marketplace algorithms that prioritise promotions.

This is why boAt’s sales growth shows high sensitivity to seasonal peaks and troughs. Any changes affecting digital commerce, disruptions in payment infrastructure, or shifts in consumer buying behaviour will directly impact boAt’s sales momentum and cash flow. 

Growing dependency on quick commerce for impulse purchases means boAt also needs to rewire its distribution strategy going forward. 

The third, and perhaps most crucial, risk lies in limited product diversification. At present, boAt’s business is heavily reliant on its audio segment, which accounts for nearly 84% of its total revenue. It tried juggling hundreds of SKUs at one point, but that didn’t work out. 

Will boAt enter more premium categories and manufacture higher-end products to extract higher margins? New categories like grooming products, chargers, and cables contribute only marginally. What can boAt do next to show that it will act like an electronics company and will not just rely on volume-driven unit economics.

Without meaningful diversification and a thesis on premiumisation, boAt risks stagnation in the medium term. This is evident in the journey of major electronics companies like Oppo, Xiaomi, Huawei and others. 

Their go-to-market was similar to boAt — disrupt with pricing and a heavy feature set — but eventually they had to cater to the premium segments as they are doing currently.   

Even within its core audio line, the pace of innovation will be vital. The market is evolving quickly, with brands like Noise partnering with audio giant Bose and big brands like OnePlus and Nothing launching budget-friendly products. Failure to keep pace with such innovations could erode boAt’s competitive edge in its most important category. 

The turnaround is undeniable, but the real story has only just begun. Does boAt have what it takes to see out the next part of its journey?

Edited By Shishir Parasher