Sameer Mehta, Co-Founder and CEO of boAt thinks the company is sailing smoothly despite macro-economic headwinds. “The consumption story for a digitally native brand like us that operates in fast-growing segments remains “solid,” he says.
His confidence may not be misplaced. The homegrown consumer electronics company Imagine Marketing Pvt Ltd, which owns boAt, has clocked about ₹4,000 crore (around $500 million ) in terms of net revenue (unaudited) in FY23 up 19.4 per cent compared to about ₹3,350 crore in FY 22. Mehta is gungho about hitting the billion dollar-mark in revenues in the next few years on the back of strong growth momentum in the audio and smartwatches segments.
The tide in its favour
“Up until last year, we were growing at 100-150 per cent as consumers were working from home and were entertaining themselves at home which fuelled the demand for audio products. With growing awareness about health, smartwatches also began seeing growth in demand,” he explains. Mehta added on a scaled up revenue base the company aims to grow at 20-25 per cent year-on-year. This will be achieved while remaining profitable, he emphasises.
One of the key pivots the company has made is “Make-in-India. It has a manufacturing JV with Dixon Technologies for making its wireless audio products in India. The two partners have invested about ₹60-65 crore and plan to increase capacity further . It also relies on partnerships with other Electronic Manufacturing Services (EMS) companies. In FY23, around 15 million products were made in India by boAt.
“It is a hard scale-up as India was traditionally not known as a manufacturing hub. But the vision and support from the government of India has helped us get there. There is also a strong momentum among Indian consumers to buy Made-in-India products. Now nearly 75 per cent of our audio devices and 90 per cent of our smartwatches are made in India,” he stresses.
With the entry of large manufacturers such as Foxconn, the brand expects the component ecosystem to also strengthen in India.
“I believe the biggest value-addition on a product is the design you make andor the software you put on it. So, we are doubling down on R&D. That gives us the key differentiator to win in the market. So for instance, we are the first to have Dolby-powered earphones. We have launched an earbud with 24 hour battery life. These are the kinds of innovations that we need to continue to deliver,” he explains. He adds that it is the brand’s focus on perfecting its products for the Indian consumers and their needs that has helped it garner a strong community of loyal consumers – known as boAtheads.
According to Counterpoint Research, boAt led India’s TWS ( Truly wireless earphones) segment for the third year in a row with 89 per cent y-o-y growth in 2022 on the back of increased penetration in domestic manufacturing, multiple affordable launches and aggressive promotions. Audio products which include TWS, wired and wireless headphones, neckbands and wired earphones contribute a big chunk of the company’s revenues.
The other big bet the company has made is in wearables through smartwatches. The wearables market in India is expected to grow at a high CAGR of 40-55 per cent to become a $2-4 billion market by 2025. Though the brand has been late to this party it is among the top three smartwatch brands in India.
“We expect the smartwatch business to scale up strongly in the next 2-3 years. Our acquisition of KaHa (a Singapore based end to end IOT player) is helping us build a health and wellness ecosystem. We believe this ecosystem will help us strengthen brand stickiness. Currently what Indian consumers are buying are essentially digital watches. But the growing health consciousness will fuel the shift to smartwatches that offer value and that is where we will come out as winners over time,” he says.
Rowing into retail
Meanwhile, the digital native brand is strongly focusing on growing its offline presence this year, especially in smaller towns and cities where there is lesser access for electronics products. boAt expects 25-30 per cent of its sales to come from offline in the next few years. It has a separate team looking to grow penetration in not only organised chains but also smaller mom-and-pop shops.
Mehta points out that whether consumers live in metros or smaller towns, they are aspirational and want the same quality of products.
“Ultimately just because one is offering a product at the right price or affordable price does not mean it need not be aspirational. They shouldn’t feel it’s just cheap. That has been the key. We offer the consumers a product that they aspire for at the right price and aim to deliver performance by being at the forefront of technology,” Mehta explained.
The company is well capitalised having last raised ₹500 crore in October in a round which saw participation of existing investor Warburg Pincus and new investor Malabar Investments. At the same time, it decided to postpone its IPO plans amidst volatile market conditions. So far the company, which also has investors include Qualcomm Ventures and Fireside Ventures, has raised $177 million. But eventually it does plan to list on the bourses.
Right now, Mehta points, “We are looking at the long-term journey rather than quarter on quarter or year on year and we can do that because we are not a public company yet. So we will hopefully get to billion dollars in revenues while remaining profitable. That’s our North Star.”
boAt has made the right bets and understood the pulse of the consumer. Right now it is coasting along. Going ahead, a lot depends on how it scales its wearables business while maintaining leadership in the audio business amidst intensifying competition from local and international brands.