Founders Step Back, Attrition Soars: Red Flags Emerge Ahead Of boAt's Rs 1,500-Crore IPO

Audio and wearables brand boAt's initial public offer appears to be encountering turbulence before even reaching the runway. In a LinkedIn post, market commentator and author Jayant Mundhra flagged several serious people-related concerns at the company, citing disclosures in its updated Draft Red Herring Prospectus.

According to the DRHP, both co-founders Sameer Ashok Mehta and Aman Gupta resigned from their executive positions just 29 days before boAt filed for its IPO. Mehta stepped down as Chief Executive Officer, while Gupta resigned as Chief Marketing Officer.

Mundhra highlighted that both have now shifted to board roles with Mehta as Executive Director and Gupta as Non-Executive Director without any salary or sitting fees, a major shift from FY25 when each reportedly earned Rs 2.5 crore in salary.

"The founders are distancing themselves from operational responsibility right before going public," Mundhra wrote, calling it a "calculated pre-IPO pivot" rather than a structured leadership transition.

But the leadership exits are only part of the concern. The DRHP shows a 34.18% full-time employee attrition rate, sharply higher than 27.09% in FY23 and 28.14% in FY24, suggesting a significant jump in resignations.

"This is not normal turnover. This is a mass exodus," Mundhra said, arguing that the company's "internal culture is completely broken."

He also pointed out that despite boAt's large employee stock option pool, the company has struggled to retain talent, implying that employees are either "miserable despite paper wealth" or "have no faith in the future value of the company's stock."

Summarising his assessment, Mundhra described the situation as a "parade of glaring red flags" for potential investors, citing founders stepping back, a shrinking talent base, and ESOPs that are failing to deliver retention value as signs of a deeper cultural and confidence issue inside the organisation.

Financials reveal another mixed picture. The company posted a net profit of more than Rs 60 crore in FY25, compared to a net loss of Rs 80 crore during the same period last year, driven primarily by product innovation and cost control. Meanwhile, consolidated revenue declined from Rs 3,122 crore in FY24 to Rs 3,098 crore in FY25.

Last month, boAt reduced its IPO size from Rs 2,000 crore to Rs 1,500 crore. As per the UDRHP, the company plans to raise Rs 1,500 crore through the IPO, which includes Rs 500 crore in fresh issuance and an offer for sale worth Rs 1,000 crore by existing investors.