Urban Tots has recently converted from a privately owned entity to a publicly owned entity. This step is the first in Urban Tots’s mission to eventually get listed on the Stock Exchange in 2026.
Uran Tots Founder Statement:
Urban Tots Founder Deepak Chaudhary had his say on this matter. According to him “India was a net importer of toys. In FY22, India imported more than Rs. 22,000 Cr. worth of toys primarily from China, Indonesia, Taiwan, etc. The government has been very supportive in assisting domestic toy manufacturing companies to scale up their products to not only make India Aatmanirbhar but also a net exporter of toys. Urban Tots plans to tap into the demand of the sector & scale up its production by participating in the PLI scheme. The Urban Tots IPO will be a momentous occasion for the Toys & Apparel sector.”
Some of the key initiatives undertaken by the govt include imposing an import tax (basic custom tax increased from 20% to 60%), and secondly to boost domestic production government has placed its focus on toy manufacturing and intends to incorporate it into the proposed PLI scheme. The PLI scheme for toys has been recommended with an outlay of Rs 3,489 crore with a scheme period from 2024-25 to 2031-32.
Financial Performance:
Let’s talk a little bit about the financial performance of the company:
Urban Tots has showcased exemplary growth in recent years, touching an absolute growth of ~100% consistently in terms of revenue & over 100% in terms of net profit since inception.
- Urban Tots clocked revenue of ₹16 Cr. in FY22 & is subsequently projected to earn returns of ₹80 Cr. in FY24 which shows a CAGR of 71% on account of strong order book value, new customer acquisition, and expansion of product base.
- Urban Tots bottom line margin also grew almost 4-fold, from ₹2.4 Cr. in FY22 to ₹9.78 Cr. in FY24, showing a CAGR of 35% on account of strong book value, the new acquisition of customers as well as effective utilization of labor & fixed assets.
- The company’s net profit margin is 12.7%, which has grown 138% from ₹4.2 Cr. in FY23 to ₹10.15 Cr. (provisional) in FY24. The company’s net profit margin has grown by 3.2% from 9% in FY23 to 12.2% in FY24 due to the effective utilization of its labor and fixed assets.
Future Expansion Strategy:
Let’s throw some light on the future expansion plans of Urban Tots:
- The company plans to conduct a pre-IPO round of ₹60 Cr at the same valuation of ₹553 Cr in 2024. The net proceeds will be utilized in capex to increase production capacity, aiding in achieving and bolstering the top line from ₹200 Cr in FY25 to ₹400 Cr by the end of FY26, with a bottom line in the range of ₹60 – ₹80 Cr.
- Following the pre-IPO round, the company also intends to launch an IPO in 2026 to raise funds totaling ₹200 Cr at a valuation of ₹2,100 Cr (with a 10% dilution of shareholding).
- The company plans to use these funds towards further investment in capex to expand production capacity by establishing another manufacturing plant in Madhya Pradesh, addressing the escalating demand and fulfilling the order book value.
- The IPO round is expected to propel the company towards achieving a top line of ₹800 Cr by the end of FY28, with a bottom line ranging from ₹150 Cr to ₹200 Cr.
- By the end of FY28, the company plans to raise ₹800 Cr further. These funds will be allocated towards establishing two new manufacturing plants in distinct regions of India, meeting working capital needs, and enhancing distribution networks. This would propel the company towards achieving a top line of ₹2,000 by the culmination of FY31, with a bottom line ranging from ₹380 Cr to ₹400 Cr.
Conclusion:
Urban Tots IPO is an enticing opportunity for investors to be part of, supporting upcoming startups to scale up & make India a net exporter of toys globally. The company has a strong business model along with a loyal customer base & a founding team with sizable experience & a clear vision to become India’s biggest Toy manufacturing unit. Accredited Investors should consider investing in Urban Tots post their investment due diligence.
