FirstCry IPO 2024: An Investor’s Guide Before Investing
As the Sensex and Nifty touch new highs, initial public offerings (IPOs) are flooding the market. The IPO juggernaut is likely to continue in August, too, with several prominent firms looking to get listed on bourses. Brainbees Solutions Limited, the children’s clothing enterprise under the
FirstCry brand, will launch its IPO on 6 August.
Source: Kotak Securities
Company Overview
According to the RedSeer report, Brainbees Solutions Limited is India’s largest multi-channel retailing platform for mothers’, babies’, and kids’ products in terms of GMV for the year ending December 2023. It launched the FirstCry platform in India in 2010 to create a one-stop destination for parenting needs across commerce, content, community engagement, and education.
The company has expanded internationally in select markets, establishing a presence in UAE and KSA in 2019 and 2022 respectively, where it aims to replicate its India playbook.
Source: RHP
IPO Details and Use of IPO Proceeds
FirstCry IPO consists of a fresh issue and an offer for sale. Here are the key details of this IPO:
| Particulars | IPO Details |
|---|---|
IPO Opens On | 6th August |
IPO Closes On | 8th August |
Price Band | ₹440 to ₹465 |
IPO Size | ₹4,193.73 crores in the upper price band |
Lot Size | 32 shares |
Minimum investment | ₹14,880 |
Source: Kotak Securities, and RHP
The company plans to use the proceeds received from its IPO for:
- Setting up new modern stores under the "BabyHug" brand
- Setting up a warehouse in India
- Meeting expenditure for lease payments for its existing identified modern stores owned and operated by it in India
- Investing in its subsidiary, Digital Age
- Investing in its subsidiary, FirstCry Trading, for overseas expansion
- Investing in its subsidiary Globalbees Brands
- Undertaking sales and marketing initiatives
- Meeting technology and data science costs, including cloud and server hosting-related costs
- Funding inorganic growth through acquisition and other strategic initiatives and general corporate purposes
Financial Performance
The table captures the key financials of the company:
| Particulars | FY23 | FY22 | FY21 |
|---|---|---|---|
Total equity and liabilities (in ₹ crores) | 7119.827 | 6197.163 | 4078.171 |
Total income (in ₹ crores) | 5731.276 | 2516.916 | 1740.059 |
Total expenses (in ₹ crores) | 6315.667 | 2568.060 | 1645.300 |
Diluted earnings per share | (9.97) | (1.74) | 5.73 |
Return on net worth | (12.76%) | (2.04%) | 6.25% |
Source: RHP
Offer Structure
The FirstCry IPO has fixed a certain number of shares to be allocated for different categories of investors, including qualified institutional buyers (QIBs), non-institutional investors (NIIs), and retail individual bidders (see table).
| Allocation Quota For | Particulars |
|---|---|
QIBs | Not less than 75% of the offer size shall be available for allocation to QIBs |
NIIs | Not more than 15% of the offer |
Retail individual bidders | Not more than 10% of the Offer |
Key Strengths and Growth Strategies
Given below are the key strengths of the company:
- India's largest multi-channel, multi-brand retailing platform for mothers', babies' and kids' products
- The company's platform has powerful network effects driven by content, brands and data
- Brand affinity, loyalty and trust of customers in the FirstCry brand
- Combination of curating growing home brands and relationships with third-party brands
- Technology and data-driven, personalised customer journey leading to higher customer engagement
- Proven and scalable business model
Here are some of the growth strategies that the company has earmarked for itself in the coming days:
- Grow its customer base by continuing to invest in the brand, technology, products, and its membership programme
- Grow its offline and online touchpoints to strengthen its multi-channel competitive advantage
- Continue expanding its portfolio of home brands
- Expand general trade retail distribution of its home brands
- Invest in manufacturing in the baby and kids’ product categories and supply chain capabilities
- Selective expansion in international markets
- Expand and grow Globalbees House of brands
Source: RHP
Industry Overview
India has one of the highest birth rates globally, with 16 births per thousand people in CY2021. The annual birth rate of India is ~1.5x of developed economies. Childcare products spending per capita in India is currently nascent, at only ₹9,280-9,350 in CY2023.
It is projected to grow faster than those in mature markets, at a CAGR of ~14% from CY2023 to CY2028. The childcare products market in India is expected to grow at a CAGR of 13-14% to reach ₹5,150-5,450 billion (approximately US$64-68 billion) by CY2028.
Source: RHP
Wrapping it Up
Before investing in this IPO, go through the company’s red herring prospectus for a complete overview of the company and its various aspects. Ensure the IPO fits your overall investment strategy and aligns with your risk tolerance.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit.
