In a highly anticipated move, shares of Brainbees Solutions, the parent company of India’s leading baby and kids products platform FirstCry, made a strong debut on the stock exchanges on Tuesday, August 13, 2024. The stock listed at a significant premium of 40% over its issue price, reflecting strong investor demand and confidence in the company’s growth prospects.
Listing Details
FirstCry shares opened at ₹651 on the National Stock Exchange (NSE), a premium of ₹186 or 40% over its initial public offering (IPO) price of ₹465 per share. On the Bombay Stock Exchange (BSE), the stock listed at ₹625, up 34.4% from the IPO price.
Ahead of the listing, FirstCry shares were trading at a grey market premium (GMP) of ₹84, indicating strong investor interest.
Oversubscribed IPO
The ₹4,193.7 crore IPO, which was open for subscription from August 6 to August 8, 2024, received an overwhelming response from investors. The issue was subscribed 12.22 times overall, with the Qualified Institutional Buyers (QIB) portion being subscribed 19.30 times.
The retail category was subscribed 2.3 times, while the Non-Institutional Investors (NII) category saw a subscription of 4.7 times.
Anchor Investors
Ahead of the IPO, FirstCry raised ₹1,885.8 crore from 71 anchor investors, including marquee names such as SBI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund, Kotak Mahindra Mutual Fund, Government of Singapore, ADIA, and Goldman Sachs.
Use of IPO Proceeds
The IPO comprised a fresh issue of 3.6 crore shares worth ₹1,666 crore and an offer for sale of 5.4 crore shares amounting to ₹2,527.7 crore. The company plans to utilize the net proceeds from the IPO for various purposes, including:
- Setting up new modern stores under the “BabyHug” and “FirstCry” brands
- Investing in subsidiary Digital Age
- Expanding into international markets
- Investing in technology and data science
- Other corporate growth initiatives
About FirstCry
Founded in 2010, Brainbees Solutions Ltd. operates the FirstCry platform, which offers a comprehensive range of products for mothers, babies, and kids. The company provides over 1.5 million SKUs from more than 7,500 brands through its online platform.
In FY24, FirstCry reported a 15% growth in operating revenue at ₹6,481 crore, while reducing losses by 34% to ₹321 crore. Over the last three financial years, the company’s revenue from operations has grown from ₹2,401 crore in FY22 to ₹6,481 crore in FY24.
FirstCry CEO Supam Maheshwari stated that the company has a total addressable market of $120 billion and has over 1,000 stores across 533 cities.
Analysts’ Views
While FirstCry’s strong market position and brand recognition are undeniable, analysts have cautioned investors about the company’s path to profitability. Shivani Nyati of Swastika Investmart highlighted the reliance on third-party manufacturers and negative cash flows as areas of concern that require close monitoring.
Akriti Mehrotra of StoxBox Research also sounded a note of caution, stating that the market may reflect initial enthusiasm but does not fully account for the company’s ongoing financial difficulties and rising debt.
The stellar debut of FirstCry shares on the stock exchanges underscores the strong investor appetite for well-established consumer brands with growth potential. The company’s focus on expanding its physical and digital footprint, coupled with its ability to cater to the diverse needs of mothers and children, positions it well for future growth.
However, investors should closely monitor the company’s financial performance and its ability to navigate the challenges posed by the highly competitive baby and kids products market. With the IPO proceeds, FirstCry aims to strengthen its position as the leading omni-channel platform for mothers, babies, and kids in India and select international markets.
