The initial public offering (IPO) of Brainbees Solutions, the parent company of Firstcry, struggled to attract investors during the second day of the bidding process amid the jittered market sentiments. The issue, which had kicked off for bidding on Tuesday, August 06, ended day one with only 11 per cent subscription.
The Pune-based Brainbees Solutions is selling its shares in the price band of Rs 440-465 apiece. Investors can apply for a minimum of 32 shares and its multiples thereafter. It is looking to raise Rs 4,193.73 crore via IPO, which includes a fresh share sale of Rs 1,660 crore and an offer-for-sale (OFS) of 5,43,59,733 equity shares.
According to the data, the investors made bids for 1,18,50,944 equity shares, or 24 per cent, compared to the 4,96,39,004 equity shares offered for the subscription by 2.30 pm on Wednesday, August 07. The three-day bidding for the issue will conclude on Thursday, August 08.
The allocation for retail investors was subscribed 89 per cent, while the portion reserved for non-institutional investors (NIIs) saw a subscription of only 20 per cent. The quota set aside for qualified institutional bidders (QIBs) quota was merely three per cent as of the time. However, the employee portion was booked 3.09 times.
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 grey market premium of Brainbees Solutions has taken a major hit amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 25-30 in the unofficial market, suggesting a listing pop of about 5-6 per cent for the investors. However, the premium in the grey market stood around Rs 85 before the issue opened for bidding.
Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it for a long term. They are a positive company's experienced management, strong market share, potential for the future, and leadership position in the market. However, rich valuations, loss making nature of business, negative cash flows and stiff competition are the key concerns.
FirstCry has a strong market position as India's largest multi-channel retailing platform for mothers’, babies’, and kids’ products, with significant revenue growth and a robust increase in customer engagement, showcased by rising GMV and app downloads, said KR Choksey.
"Its multi-channel approach, effective use of content and technology, and strategic expansion into international markets. Given that the price to sales multiple at the upper price band of 3.8x is at a much higher discount to more directly related peers (Online + Offline presence) like FSN E-commerce & Honasa, we assign 'subscribe' rating for this IPO," it added.
Brainbees Solutions mobilised Rs 1,885.8 crore through anchor book as it allocated 4,05,55,428 shares at Rs 465 apiece.It reported a net loss of 321.51 crore with a revenue of Rs 6,575.08 crore for the fiscal year ended on March 31, 2024. 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.
Firstcry has created a niche space in the mothers and early kids age category and has strong brand reminiscence as well. While India business has been making margins of 9 per cent, its International business continues to bleed at operating level. However, Management is confident of replicating India's success story there as well, said Nirmal Bang Securities.
"On the backdrop of changing retail and ecommerce dynamics, the mother and child care product market is expected to grow at a CAGR of 13-15% during FY 24-29. Firstcry’s shares are available at EV/sales of 3.8 times FY24 which is lower than peers. Given Firstcry’s leadership position in the niche segment of baby products, we recommend Subscribe to the issue for the long term," it said.
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.
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