Brainbees Solutions IPO opens today: Should you subscribe to Firstcry's issue

The initial public offering (IPO) of Brainbees Solutions, the parent company of Firstcry, opens for bidding today, that is on Tuesday, August 6. The company is selling its shares in the range of Rs 440-465 apiece, which can be subscribed till Thursday, August 08. Investors can apply for a minimum of  32 equity shares and its multiples thereafter.  

Brainbees Solutions, Founded in 2010, offers products for mothers, babies, and Kids via its online platform 'FirstCry'. It aims to create a one-stop store for parents' retail, content, community engagement, and education needs. The company offers products from Indian third-party brands, global brands, and its own brands.  

The Rs 4,193.73 crore IPO of Firstcry includes a fresh share of Rs 1,666 crore and an offer-for-sale (OFS) 5,35,59,733 equity shares by its existing shareholders, amounting to Rs 2,490.52 crore. The net proceeds from the issue shall be utilized for opening new modern stores; investments in its subsidiaries for acquisition, sales and marketing initiatives; and general corporate purposes.  

Ahead of its IPO, Brainbees Solutions mobilised Rs 1,885.8 crore through anchor book as it allocated 4,05,55,428 shares at Rs 465 apiece. Marquee investors including Government of Singapore, Monetary Authority of Singapore, Government Pension Fund, Abu Dhabi Investment Authority, Nomura Funds, Goldman Sachs, Carmignac Portfolio, Florida Retirement participated in the anchor book.  

Brainbees Solutions offers everything needed for an infant up to the age of 12, including apparel, footwear, baby gear, nursery, diapers, toys, and personal care, amongst others. The company has an extensive offering for mothers, babies, and Kids with more than 1.5 million SKUs from more than 7,500 brands on its multi-channel platform across categories.  

Firstcry is the largest specialized online retail platform for maternal, baby, and Kids' products in the UAE, in terms of GMV, for the year ending December 2023. The company had a network of over 900 contract manufacturers in India and other countries for its house brands,, for the period ended December 2023.  

For the fiscal year ended on March 31, 2024, Brainbees Solutions reported a net loss of 321.51 crore with a revenue of Rs 6,575.08 crore. Firstcry parent's net loss stood at Rs 486.06 crore with a revenue of Rs 5,731.28 crore for the financial year 2022-23.  

Brainbees Solutions has reserved shares worth Rs 3 crore for its eligible employees, who will get a discount of 44 per share. 75 per cent of the net offer has been reserved for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. Remaining 10 per cent of the net offer shall be allocated for retail investors.  

Kotak Mahindra Capital, Morgan Stanley India, Bofa Securities India, JM Financial and Avendus Capital are the book running lead managers of the Brainbees Solutions IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with August 13 as the tentative date of listing. Here's what analysts said about the Firstcry IPO:  

Swastika Investmart Rating: Neutral Brainbees Solutions is India’s largest online retailer of baby and child care products, boasting strong brand recognition, customer loyalty, and engagement.  However, Brainbees has encountered financial challenges, incurring losses despite revenue growth. Negative cash flows further underscore these concerns. It operates in a highly competitive landscape, said Swastika Investmart.  

"Due to the absence of profitability, a meaningful P/E valuation cannot be determined. Additionally, the lack of comparable listed peers limits comparative analysis. Consequently, we maintain a 'neutral' stance on the IPO and advise investors to conduct thorough due diligence before making an investment decision," it added.  

SBI Securities Rating: Subscribe for long term Brainbees Solutions is valued at the FY24 EV/sales multiple of 3.4 times and P/B of 5 times on post-issue capital. The company has turned Ebitda positive in FY24 while registering a growth of 15 per cent CAGR over the last 2 years on the revenue front. It is well placed to cater to the $120 billion market size of the child, mother & kids care products, said SBI Securities.  

"It has grown its store count by 50 per cent to 1063 in the last 2 years, breakeven of these stores is expected to contribute to profitability. The India operation is presently contributing 70 per cent of the total revenue with an Ebitda margin of 8.8 per cent while the international operations are loss-making, so turnaround of this will significantly contribute to profitability," it said with 'subscribe for long term' rating.  

Marwadi Financial Services Rating: Subscribe Considering the FY24 Sales of Rs 6,481 crore, Brainbees Solutions is going to list at mcap/sales of 3.72 times with a market cap of Rs 24,142 crore. There are no listed entities comparable with that of the company's business, said Marwadi Financial Services.  

"We assign a 'subscribe' rating to this IPO as the company is India’s largest multi-channel, multi-brand retailing platform for Mothers, Babies and Kids products. Also, it is available at reasonable valuation on an absolute basis," it said.  

AUM Capital Rating: Subscribe FirstCry is the leading brand in India. With a rise in disposable income, parents nowadays do not mind spending an extra amount for the wellbeing and benefit of their children. With its unique brand positioning and market share, FirstCry always finds itself as the prime choice amongst its prospective customers, said AUM Capitals IPO note.  

"India’s childcare penetration is very low compared to world standards which presents an enormous opportunity for branded players like FirstCry. Further investment into its manufacturing facilities is expected to solidify its presence not only in India but at the international levels also. We would hence recommend a 'subscribe' to the issue," it said.  

StoxBox Rating: Avoid The current fund raise is intended for operational purposes rather than debt reduction. Given the rising debt levels and persistent loss-making status, we recommend an 'avoid' rating for the issue, said StoxBox in its IPO note. "We will reassess our recommendation if there is a sustained improvement in financial metrics in future," it said.  

Sushil Finance Rating: Subscribe with caution Brainbees Solutions expanded internationally in select markets, establishing a presence in the UAE and Saudi Arabia in 2019 and 2022, respectively. The growth in company’s revenues has been driven by both organic growth and inorganic growth. However, the company has undergone losses in the past.  

"The revenue CAGR for the period FY 22-24 stood at 64 per cent, whereas the profit declined in the same period. It operated on an Ebitda margin of 1.09 per cent for year ended FY24. The company focusses on capital efficiency while scaling the business. Looking at all the factors, risks, opportunities and valuation, risk savvy investors may subscribe for the issue with a long-term view," it said.

 

 

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