Investors facing potential financial losses as Bluestone decreases its IPO valuation, causing concern amongst them.
In the bustling tech hub of Bengaluru, jewellery firm Bluestone is preparing for its initial public offering (IPO). However, a closer look at the company's financial performance and valuation changes reveals that late-stage investors, who joined the cap table in the last year, may face significant potential losses compared to early-stage investors.
Bluestone's revenue grew by an impressive 40% between financial years ending March 31, 2024, and March 31, 2025. Yet, the profit after tax (PAT) dropped sharply by 56%, indicating worsening profitability despite increased scale. Financial data shows that the company has been recording substantial losses over the previous years, with a PAT of -₹142.24 crore in 2024 and -₹167.24 crore in 2023. Although the losses have narrowed compared to 2022's -₹1268.41 crore loss, they still represent ongoing losses.
Early-stage investors, who invested in Bluestone when it had significantly lower valuations and prior to this loss trend stabilization, would have acquired equity at a much lower cost basis. On the other hand, late-stage investors investing in the past year, closer to the IPO, face risks that the company has yet to become profitable. With the IPO being an offer for sale (OFS), and significant losses continuing, their paper gains may be limited or negative if IPO pricing does not reflect improvement.
As a founder-led company backed by professional management and well-known investors, the IPO aims to raise capital to stabilize and scale. However, the sharp decline in PAT despite revenue growth typically diminishes near-term valuation increase, impacting late-stage investors more than early ones.
Pro members, who have access to exclusive curated articles related to Bluestone's IPO, can gain further insights into this investment opportunity. The IPO of Bluestone is open for subscription to Pro members on the website. Early-stage investors, such as Saama Capital, Accel Partners, and Kalaari Capital, are sitting on a potential multi-bagger with the company's IPO.
It is important to note that the specific returns for the late-stage investors in Bluestone's IPO are not yet clear. The uncertainty faced by these investors stems from the persistent losses and uncertain profitability ahead of the IPO. The recent large losses relative to revenue gains suggest that late-stage investments in the past year carry a higher risk of loss compared to early-stage holdings.
[1] Source: Curated article for Pro members [2] Source: Curated article for Pro members
- Late-stage investors, who invested in Bluestone just before its IPO, might encounter substantial potential losses compared to early-stage investors, as the company's profitability remains uncertain and its past financial performance shows ongoing losses.
- Despite the impressive revenue growth, Bluestone's sharp decline in profit after tax indicates a worsening profitability, potentially impacting the valuation and returns for late-stage investors more than early ones, especially considering the persistent losses reported in previous years.
