| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 440 to ₹ 465 | 32 | 06th Aug, 2024 – 08th Aug, 2024 | ₹4,193.73 Cr |
Company Overview
Founded in 2010, Brainbees Solutions Ltd. (BSL), operating under the brand “FirstCry,” stands as India’s largest multi-channel retail platform for mother, baby, and kids’ products. The platform features over 1.5 million SKUs from more than 7,500 brands, including popular home brands like BabyHug. FirstCry caters to the parenting journey from conception through the child’s early years, offering a blend of retail, content, community engagement, and education. The company operates through a diverse network of online platforms, company-owned and franchisee-owned modern stores, and general trade retail distribution. FirstCry’s extensive product range spans various categories including clothing, toys, books, and baby care essentials. Internationally, FirstCry has established a strong presence in the UAE and KSA, where it is recognized as a leading specialist online retailer in these markets. The company’s robust governance, combined with its strategic focus on scaling D2C brands and maintaining a substantial network of contract manufacturers and distributors, supports its substantial operational footprint. As of March 31, 2024, FirstCry operates 435 company-owned and 628 franchisee-owned stores across India and employs 5,810 people. The company’s key metrics reflect its growth, with annual unique transacting customers increasing from 6.86 million in FY22 to 9.11 million in FY24, alongside rising order volumes and average order values.
Objects of the issue:
The company proposes to utilize the net proceeds towards the funding of the following objects:
- Expenses of the company for: (I) establishment of new modern stores under the “BabyHug” brand; and (II) establishment of a warehouse in India;
- Expenditure on lease payments for existing identified modern stores owned and operated by the company in India;
- Investments in its subsidiary Digital Age for (I) setting up new modern stores under the FirstCry brand and other house brands of the company; and (II) lease payments for the existing identified modern stores owned and controlled by Digital Age in India;
- Investment in subsidiary FirstCry Trading for overseas expansion by: (I) establishment of new modern stores; and (II) establishment of warehouses in KSA;
- Investment in subsidiary Globalbees Brands for the acquisition of an additional stake in its subsidiaries;
- Sales and marketing initiatives;
- Technology and data science costs, including cloud and server hosting costs;
- Financing of inorganic growth through acquisitions and other strategic initiatives and general corporate purposes.
Investment Rationale:
India’s top multi-channel retailer for mother, baby, and kids’ products with strong network effects
FirstCry is India’s largest multi-channel, multi-brand retailer for mother, baby, and kids’ products, seamlessly integrating modern stores with online convenience. Its extensive multi-channel model and robust content strategy generate strong network effects, creating a virtuous cycle of customer engagement and acquisition. Through a mix of user-generated and expert content on its FirstCry.com parenting platform, and insights from a vast mobile app user base, FirstCry identifies market needs and enhances customer interactions. This strategy drives higher transaction frequency, informs product and pricing decisions, and improves operational efficiency. Internationally, FirstCry leads as the top specialist online retailer in the UAE and KSA, with plans to replicate its successful model in new markets. The increased transactions enable FirstCry to achieve higher operating leverage, improve quality and cost control, and offer better pricing to customers, as demonstrated by its flywheel effect
FirstCry drives market leadership through brand strength, personalized engagement, and efficient operations
FirstCry, India’s largest multi-channel retailer for mother, baby, and kids’ products, has built significant brand affinity, as evidenced by its growing base of unique transacting customers, which reached 9.11 million in FY24. The company leverages this brand strength to expand its product and service offerings and improve customer engagement. Its comprehensive approach includes personalized content on FirstCry.com, a robust gift hamper program for new parents, and strategic expansion into international markets. FirstCry maintains a competitive edge through centralized inventory management, data-driven merchandising, and a well-established supply chain network, including over 900 contract manufacturers and 80 warehouses. This integrated model supports efficient product replenishment, high-quality control, and timely delivery, contributing to its strong market position.
Valuation
FirstCry, a prominent player in the multi-channel retail market for children’s and maternal products, showcases impressive customer engagement and operational efficiency through its well-integrated physical and online platforms. The company benefits from strong network effects driven by rich user-generated and expert content, complemented by its centralized inventory management and supply chain network, which further enhance operational effectiveness. However, despite these advantages, FirstCry faces significant challenges. Persistent negative cash flows, driven by working capital issues and substantial investments, alongside regulatory non-compliance and legal troubles, pose risks to its reputation and stability. Financially, while the company achieved a topline growth of 15% in FY24, increasing revenue from Rs. 5,731.3 crores to Rs. 6,575.1 crores, it has continued to struggle with consistent losses, reporting loss of Rs. 321.5 crores in FY24 with no immediate signs of recovery. Additionally, the company’s debt surged from Rs. 176.5 crores in FY23 to Rs. 462.7 crores in FY24. The current fund raise is intended for operational purposes rather than debt reduction. Given the rising debt levels and persistent loss-making status, we recommend an “Avoid” rating for the issue. We will reassess our recommendation if there is a sustained improvement in financial metrics in future.
What is the Brainbees Solutions Ltd. (First Cry) IPO?
Brainbees Solutions (Firstcry) IPO is a book built issue of Rs 4,193.73 crores. The issue is a combination of fresh issue of 3.58 crore shares aggregating to Rs 1,666.00 crores and offer for sale of 5.44 crore shares aggregating to Rs 2,527.73 crores.
How to apply for the Brainbees Solutions Ltd. (First Cry) IPO through Stoxbox?
To apply for the Brainbees Solutions Ltd. (First Cry) IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Brainbees Solutions Ltd. (First Cry) IPO open?
Brainbees Solutions Ltd. (First Cry) IPO is opening on 06th August 2024.
What is the lot size of the Brainbees Solutions Ltd. (First Cry) IPO?
The Lot Size of Brainbees Solutions Ltd. (First Cry) IPO is 32 equity shares
When is the Brainbees Solutions Ltd. (First Cry) IPO allotment date?
The allotment Date for Brainbees Solutions Ltd. (First Cry) IPO is 09th August 2024
When is the Brainbees Solutions Ltd. (First Cry) IPO listing date?
The listing Date for Brainbees Solutions Ltd. (First Cry) IPO is 13th August 2024
What is the minimum investment required for the Brainbees Solutions Ltd. (First Cry) IPO?
In the Retail segment the minimum investment required is Rs. 14,880
What is the maximum investment allowed for the Brainbees Solutions Ltd. (First Cry) IPO?
In the Retail segment the maximum investment requirement is Rs. 193,440
What are the risks associated with investing in the Brainbees Solutions Ltd. (First Cry) IPO?
- Future cash flow concerns: FirstCry’s historical performance does not guarantee future growth or financial outcomes, potentially complicating the maintenance of its growth rates and strategic execution. Recent years have witnessed negative cash flows largely due to working capital fluctuations and substantial investments in bank deposits and subsidiaries, posing challenges to operational efficiency and future growth prospects.
- Regulatory non-compliance and financial challenges in subsidiaries: The company and its officials have faced penalties for past non-compliances with the Companies Act 2013, including violations related to share issuances and filing obligations. These challenges, alongside financial difficulties in subsidiaries like Firstcry Retail DWC LLC, which sells baby, kids, maternity, and home products, underscore ongoing compliance and borrowing restrictions, potentially impacting future operations and financial stability.
- Legal and tax challenges: The company and its subsidiaries are currently involved in significant litigation proceedings at various levels of adjudication, posing potential risks to their reputation, business operations, financial condition, and cash flows in the event of adverse outcomes. Additionally, the company has received summons from the Income Tax Department related to certain share allotments, which could lead to further adverse impacts if not resolved favourably.
When will the Brainbees Solutions Ltd. (First Cry) IPO shares be credited to my Demat account?
The Brainbees Solutions Ltd. (First Cry) IPO be credited to the account on allotment date which is 12th August 2024
Where can I find the Brainbees Solutions Ltd. (First Cry) IPO prospectus?
The prospectus of Sanstar IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to the Brainbees Solutions Ltd. (First Cry) IPO?
| IPO Open Date | Tuesday, August 6, 2024 |
|---|---|
| IPO Close Date | Thursday, August 8, 2024 |
| Basis of Allotment | Friday, August 9, 2024 |
| Initiation of Refunds | Monday, August 12, 2024 |
| Credit of Shares to Demat | Monday, August 12, 2024 |
| Listing Date | Tuesday, August 13, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on August 8, 2024 |
