Firstcry IPO opens: Here's all you need to know

Firstcry IPO: Brainbees Solutions, parent company of popular kids' products maker Firstcry, launched its much-anticipated Initial Public Offering (IPO) on Tuesday, August 6, 2024. company aims to raise Rs 4,193.73 crore through IPO, which consists of a fresh issue of Rs 1,666 crore and an Offer for Sale (OFS) worth Rs 2,527.73 crore from existing shareholders.

Firstcry IPO Details

IPO price band has been set at Rs 440-Rs 465 per share. Retail investors can bid for a minimum of one lot comprising 32 shares, with a maximum cap of 13 lots. At upper end of price band, one lot is valued at Rs 14,880.

In total, Brainbees Solutions is offering 90,194,432 shares through this IPO. distribution includes 27,036,953 shares (29.98 per cent) allocated to Qualified Institutional Buyers (QIBs), 13,518,476 shares (14.99 per cent) to Non-Institutional Investors (NIIs), 9,012,317 shares (9.99 per cent) to Retail Individual Investors (RIIs), 71,258 shares (0.08 per cent) for employees, and 40,555,428 shares (44.96 per cent) for Anchor investors.

Firstcry Business Overview and Financial Performance

Founded in 2010, Brainbees Solutions operates Firstcry, an online platform that offers a wide range of products for mors, babies, and children up to age of 12. company provides various products, including apparel, footwear, baby gear, nursery items, diapers, toys, and personal care products. platform features products from Indian third-party brands, international brands, and its own private labels, offering over 1.5 million SKUs from more than 7,500 brands.

Brainbees Solutions has positioned itself as a comprehensive resource for parents, offering retail products, content, community engagement, and educational resources. company has shown strong financial performance, with revenue increasing by 14.72 per cent and profit after tax (PAT) rising by 33.85 per cent between financial years ending March 31, 2023, and March 31, 2024.

IPO includes an OFS by existing investors, with notable participants like SVF Frog, a Cayman Islands-based entity of SoftBank, offloing 2.03 crore shares, and Mahindra & Mahindra (M&M) selling 28.06 lakh shares. Currently, SoftBank holds a 25.55 per cent stake in Brainbees Solutions, while M&M owns 10.98 per cent. Or entities participating in OFS include PI Opportunities Fund, TPG, NewQuest Asia Investments, Apricot Investments, and Schroders Capital.

company plans to use proceeds from IPO for multiple strategic initiatives, including establishing new stores under "BabyHug" brand, setting up a warehouse in India, and making lease payments for existing stores. ditionally, Brainbees Solutions intends to invest in its subsidiaries Digital Age and FirstCry Tring for expansion of stores and warehouses in India and abro, including Kingdom of Saudi Arabia (KSA). funds will also support sales and marketing initiatives, technology and data science enhancements, and inorganic growth through acquisitions and or strategic initiatives.

IPO is managed by a consortium of book-running le managers, including Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Pvt Ltd, Bofa Securities India Limited, JM Financial Limited, and Avendus Capital Pvt Ltd. Link Intime India Private Ltd serves as registrar for issue.

shares are expected to be listed on both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), with a tentative listing date of August 13, 2024.

Should you invest in Firstcry IPO?

Brainbees Solutions is valued at a FY24 EV/sales multiple of 3.4 times and a price to book (P/B) of 5 times based on post-issue capital. company became EBITDA positive in FY24, demonstrating a 15 per cent CAGR in revenue over past two years, SBI Securities said in an IPO note. According to SBI Securities, company is well-positioned to serve $120 billion market for child, mor, and kids care products.

"It has expanded its store count by 50 per cent to 1,063 stores over last two years. breakeven of se stores is expected to contribute to profitability. Currently, Indian operations contribute 70 per cent of total revenue with an EBITDA margin of 8.8 per cent, while international operations are loss-making. A turnaround in international operations could significantly boost profitability," SBI Securities said, assigning a 'subscribe for long term' rating.

Brokerage firm Swastika Investmart has a neutral rating on IPO it says Brainbees Solutions is India's largest online retailer of baby and child care products, known for strong brand recognition, customer loyalty, and engagement. However, company faces financial challenges, with losses despite revenue growth and negative cash flows underscoring se concerns. Swastika Investmart noted that Brainbees operates in a highly competitive market.

"Due to lack of profitability, a meaningful P/E valuation cannot be determined. ditionally, absence of comparable listed peers complicates comparative analysis. As a result, we maintain a 'neutral' stance on IPO and vise investors to conduct thorough due diligence before making an investment decision," Swastika Investmart said.