Firstcry Parent Brainbees Solutions IPO - Investment Rationale, Financials, Risks, Peer Comparison: DRChoksey

DRChoksey Research Report

Firstcry parent Brainbees Solutions Ltd., launched its initial public offering today and the subscription will close on August 08. The company has fixed the price band in the range of Rs 440 and Rs 465 per share, with a minimum lot size of 32 shares.

The Rs 4,193.73 crore, includes a fresh issue of 3.58 crore shares, aggregating to Rs 1,666.00 crore, and an offer-for-sale of 5.44 crore shares, aggregating to Rs 2,527.73 crore.

Outlook and Valuation:

FirstCry has a strong market position as India's largest multi-channel retailing platform for mothers’, babies’, and kids’ products, with significant revenue growth and a robust increase in customer engagement, showcased by rising gross merchandise value and app downloads.

The company's multi-channel approach, effective use of content and technology, and strategic expansion into international markets and new product categories underpin its growth potential. The company has grown from Rs 35,975 million to Rs 64,809 million over FY22 to FY24 implying a 2-year revenue CAGR of 64.3%. The Adjusted Ebitda has grown from 2.6% in FY22 to 4.2% in FY24 showcasing incremental profitability of the company.

Given that the price to sales multiple at the upper price band of 3.8 times is at a much higher discount to more directly related peers (Online plus Offline presence) like FSN E-commerce and Honasa, we assign Subscribe rating for this IPO.

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