FirstCry sets price band of Rs 440-465 a share for IPO

FirstCry's market leadership in Asia's baby and kids' product sector is strong

Brainbees Solutions Ltd, which operates omnichannel businesses of kidswear under the brand name FirstCry, has set a price band of Rs440-465 a share for its initial public offerings.

The issue opens on August 6, with anchor bidding starting on August 5. The IPO closes on August 8. The allotment basis will be determined on August 9, refunds and shares will be credited to accounts on August 12, and the firm will list on August 13.

The IPO consists of a fresh issue of Rs 1,666 crore. On the upper price band, the OFS is valued at Rs 2,527.72 crore. The total issue size will be Rs 4,187.72 crore while the total market cap will be Rs 22,475 crore or $2.68 billion.

FirstCry parent BrainBees had first filed draft IPO papers with India's Securities and Exchange Board of India (Sebi) last December for an IPO. FirstCry, however, withdrew its draft papers after the capital markets regulator, SEBI, sought more clarity on key performance indicators (KPIs). SEBI had initially sought 25 KPIs of which FirstCry provided only 5-6 in its first set of filings, sources told Moneycontrol earlier.

When the company refiled its IPO papers, it provided more clarity on its financials. The Pune-based company said that it generated a revenue of Rs 6,480.86 crore in FY24 from Rs 5,632.54 crore a year ago. During the same period, it incurred a loss of Rs 321.51 crore versus Rs 486.01 crore last year. EBITDA stood at Rs 70.49 crore against EBITDA loss of Rs 262.90 crore last year. Its GMV increased to Rs 9,121.13 crore in FY24 from Rs 7,257.64 crore in FY23.

Firstcry, India's leading multi-channel retailer for Mothers’, Babies’, and Kids’ products by GMV, operates online, through company-owned and franchise stores, and general trade distribution. It’s also expanding in select international markets.

As of FY24, FirstCry operates a mix of franchisee-owned (FOFO) and company-owned (COCO) modern stores, plus general trade distribution. Its COCO stores are managed through the Digital Age. It 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, MD of Highbrow Securities, while the company boasts significant strengths, investors should exercise caution before committing. The continued losses undermine confidence in the company's ability to convert high revenues into sustainable profitability.

FirstCry has strong market leadership in Asia's baby and kids' product sector, with a vast catalogue of over 90,000 products from 1,200 brands. Strategic alliances with major brands like Funskool, Farlin, Mattel, Pampers, and Disney enhance its offerings. It has secured investments from Saif Partners, Valiant Capital Partners, and IDG Ventures India, and boasts 100 franchised stores across 85 cities. Innovative customer acquisition has built a loyal base.

Singh, however, further said there are significant concerns. The broad use of IPO proceeds for new stores, overseas expansion, marketing, and technology suggests a lack of focus. High capital expenditure for new stores and warehouses poses financial risks. Despite rising revenues, a sharp decline in PAT indicates profitability issues. High lease payments drain cash reserves, and the competitive market adds complexity. International expansion plans into the UAE and KSA introduce further risks, he added.