Home/Blogs/Mahindra and Mahindra Backed FirstCry IPO Opens from 6th August

Mahindra and Mahindra Backed FirstCry IPO Opens from 6th August

ipo
01 Aug 20246 mins readBy MOFSL

BrainBees Solutions Ltd, the parent company of FirstCry, will launch its IPO from August 6 to August 8, as per its red herring prospectus.

FirstCry IPO

 
 

Offer Period

06th Aug - 08th Aug

 

Issue Details

Fresh Issue - 1,666 cr & OFS - 5.43 cr shares

 

Face Value

Rs 2/share

 

Price Band

Rs 440 - 465

 

Retail Minimum Bid

Rs 14,880 shares for 32 shares

 

Post Issue Market Cap

Rs 22,934 cr - 24,142 cr

 

Listing

BSE & NSE

 

Allotment Date

9th August 2024

 

Credit of Shares to Demat A/c

12th August 2024

 

Listing Date

13th August 2024

 

About FirstCry

FirstCry is India’s leading retailer of mothers’, babies’, and kids’ products by GMV. It operates online, through company-owned and franchise stores, and in general trade distribution. The company is also expanding internationally. By FY24, FirstCry managed a mix of franchisee-owned and company-owned stores and general trade distribution. It offers over 1.65 million SKUs from 7,580 brands. The FirstCry app has been downloaded over 127 million times, and the company operates 1,063 stores across 533 cities, totalling 2.12 million square feet of retail space.

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FirstCry is a market leader in Asia's baby and kids’ product sector, offering 90,000 products from 1,200 brands. It has strategic alliances with brands like Funskool, Farlin, Mattel, Pampers, and Disney, and has received investments from SAIF Partners, Valiant Capital Partners, and IDG Ventures India. It boasts 100 franchised stores across 85 cities. Further, FirstCry expanded internationally in the United Arab Emirates (UAE) in 2019 and the Kingdom of Saudi Arabia (KSA) in 2022.

Issue Details

The IPO will open on August 6, with anchor bidding starting on August 5, and will close on August 8. The allotment basis will be determined on August 9, with refunds and shares credited by August 12, and the listing on August 13. The IPO consists of a fresh issue of Rs 1,666 crore, with the OFS valued at Rs 2,527.72 crore, totalling Rs 4,187.72 crore. The total market cap will be Rs 22,475 crore ($2.68 billion).

FirstCry seeks around 3.5X revenue multiples in valuation, with FY24 revenue surpassing Rs 6,500 crore. Experts believe the tempered valuation could attract both institutional and retail investors. Despite rising revenues, the company faces profitability issues, with high capital expenditure and lease payments draining cash reserves. International expansion into the UAE and KSA introduces further risks. 

Financials

The company generated revenue of Rs 6,480.86 crore in FY24, up from Rs 5,632.54 crore the previous year. 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 an 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.

The company managed to reduce its losses by 34% to Rs 321 crore in FY24, down from Rs 486 crore in FY23, thanks to decent growth and controlled expenditure. Its ROCE and EBITDA margin improved to -3.47% and 2.51%, respectively. On a unit level, the company, led by Supam Maheshwari, spent Rs 1.06 to earn a rupee in FY24.

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Bid Size & BRLM

75% of the issue size is reserved for qualified institutional buyers, 35% for non-institutional investors, and 10% for retail investors. Investors can bid for a minimum of 32 equity shares and in multiples thereof. The book-running lead managers are Kotak Mahindra Capital Company Ltd, Morgan Stanley India Company Private Ltd, BofA Securities India Ltd, JM Financial Ltd, and Avendus Capital Private Ltd.

Some investors may be concerned about FirstCry's negative margins, despite the possibility of breaking even in a quarter or two. The kids' category offers significant value from manufacturer to customer, and FirstCry's struggle, despite controlling the distribution channel, suggests issues with procurement or a high-cost structure. Identifying these key issues before the IPO is crucial. Let’s see how things turn out after the IPO.

 

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