FirstCry IPO: Brainbees Solutions Ltd, the company behind the FirstCry brand of kidswear, has set a price range of Rs 440-465 per share for its upcoming initial public offering (IPO).
The IPO opens on August 6, with anchor bidding beginning on August 5, and closes on August 8. The allotment will be decided on August 9, with refunds and shares credited by August 12. The company plans to list on August 13.
The IPO includes a fresh issue worth Rs 1,666 crore. At the upper price band, the Offer for Sale (OFS) is valued at Rs 2,527.72 crore, making the total issue size Rs 4,187.72 crore. This brings the company’s total market capitalization to Rs 22,475 crore, or $2.68 billion.
FirstCry’s parent company, Brainbees, initially filed draft IPO papers with the Securities and Exchange Board of India (SEBI) last December. However, FirstCry withdrew its draft after SEBI requested more information on key performance indicators (KPIs). Initially, SEBI asked for 25 KPIs, but FirstCry provided only 5-6 in its first filings, according to sources cited by Moneycontrol.
When the company refiled its IPO documents, it offered more detailed financial information. The Pune-based company reported revenue of Rs 6,480.86 crore for FY24, up from Rs 5,632.54 crore the previous year. During the same period, it reduced its loss to Rs 321.51 crore from Rs 486.01 crore. EBITDA improved to Rs 70.49 crore from a loss of Rs 262.90 crore the previous year. Gross Merchandise Value (GMV) increased to Rs 9,121.13 crore in FY24 from Rs 7,257.64 crore in FY23.
FirstCry, a leading multi-channel retailer of products for mothers, babies, and kids by GMV, operates online, through company-owned and franchise stores, and general trade distribution. It is also expanding into select international markets.
As of FY24, FirstCry operates a mix of franchisee-owned (FOFO) and company-owned (COCO) stores, along with general trade distribution. Its COCO stores are managed through the Digital Age. The company offers over 1.65 million SKUs from 7,580 brands, covering apparel, footwear, baby gear, and more. The FirstCry app in India has been downloaded over 127 million times. It has 1,063 FirstCry and BabyHug stores across 533 cities, totaling 2.12 million square feet of retail space.
According to Tarun Singh, Managing Director of Highbrow Securities, while FirstCry has considerable strengths, investors should be cautious. The company’s ongoing losses raise concerns about its ability to convert high revenue into sustainable profits.
FirstCry has a strong leadership position in Asia’s baby and kids’ product sector, with a vast catalog of over 90,000 products from 1,200 brands. Strategic partnerships with major brands like Funskool, Farlin, Mattel, Pampers, and Disney enhance its offerings. The company has received investments from Saif Partners, Valiant Capital Partners, and IDG Ventures India and has 100 franchised stores across 85 cities. Its innovative customer acquisition strategies have built a loyal customer base.
However, Singh pointed out significant issues. The wide-ranging use of IPO proceeds for new stores, overseas expansion, marketing, and technology indicates a lack of focus. High capital expenditures for new stores and warehouses present financial risks. Despite increasing revenues, the sharp decline in Profit After Tax (PAT) highlights profitability challenges. High lease payments deplete cash reserves, and the competitive market adds complexity. International expansion plans into the UAE and KSA introduce further risks, he added.