Firstcry-parent Brainbees Solutions IPO booked 7x on Day 3 so far; GMP continues to fall

The initial public offering (IPO) of Brainbees Solutions, the parent company of Firstcry, managed to sail through and get a decent subscription on the third and final day of the bidding process, thanks to the institutional push, which came in at the last moment. The issue was booked slightly more than 30 per cent on the second day.
 

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 35,37,95,488 equity shares, or 7.13 times, compared to the 4,96,39,004 equity shares offered for the subscription by 2.50 pm on Thursday, August 08. The three-day bidding, which opened on Tuesday, August 06, concludes today.
 

The allocation for qualified institutional bidders (QIBs) quota was booked 11.23 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 2.42. The quota set aside for retail investors was subscribed 1.93 per cent as of the time. However, the employee portion was booked 5.84 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 on the back of lacklustre bidding for the issue. Last heard, the company was commanding a premium of merely Rs 10-12 in the unofficial market, suggesting a listing pop of about merely 2 per cent. 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.
 

Brainbees Solutions is bringing the issue at a price band of Rs 440-465 per share at P/S multiple of 4 times on FY24 basis. The company is India's largest multi-channel, multi-brand retailing platform for Mothers’, Babies’ and Kids’ Products. Its platform has powerful network effects driven by content, brands and data, brand affinity, loyalty and trust of customers, said Hem Securities.
 

"Combination of curating growing home brands and relationships with third-party brands, the company’s technology and data driven, personalized customer journey leads to higher customer engagement, full-stack platform with control over manufacturing and supply chain & company has proven and scalable business model," it said with a 'subscribe' for long term tag.
 

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 is engaged in the business of buying, selling, advertising, promoting baby and kids products and FMCG on a wholesale basis through various business partners. On a consolidated level, the company’s rev has grown at a CAGR of 64.3 per cent over FY22-24, said Indsec Research.
 

"At an operating level, the company has turned Ebitda positive in FY24. Core India multi-channel business contributed 70 per cent to the revenue with operating margin of 8.8 per cent. The company continues to burn cash in International and Globalbees. In the short-term, we remain cautious considering higher investment and low profitability status," it said with a 'subscribe for long term.
 

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.

 

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