Brainbees Solutions gains 3% as JM Financial initiates coverage with 'buy' rating

FirstCry India's multi-channel accounts for 20 percent+ market share of organised (online + brick and mortar) childcare market in India with online market share of roughly 24 percent. "While the consumers still have potential options when their children cross 4-5 years of age, FirstCry has an extremely dominant market positioning for 0-4 year age group," noted JM Financial.

FirstCry has honed a successful playbook over 15 years. In 2019, it expanded to the UAE, followed by Saudi Arabia in 2022, tapping into a $10 billion opportunity by FY29. While UAE operations will stay online, KSA will replicate India's multi-channel model, with combined profitability expected by FY27.

The company targets gross margin expansion of about 6.5 percent by FY28, driven by higher contribution from FirstCry home brands, COCO store expansion reducing franchisee margin sharing, economies of scale boosting manufacturing margins, and improved take-rate negotiations with third-party brand partners.

Key risks to JM Financial's assessment include: COCO store expansion cannibalising existing outlets, execution hurdles in the international segment, and increased competition from QC players or Meesho eroding market share.

Over the past year, shares of Brainbees Solutions have fallen around 8 percent. During the same time, the Nifty 50 index has gained around 13 percent in trade.

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