Firstcry Parent Brainbees Solutions IPO: Here's All You Need To Know

Brainbees Solutions Ltd., the parent company of Firstcry, will launch its initial public offering, or IPO, on Aug. 6. The IPO, worth 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. The subscription for the IPO will close on Aug. 8.

The price band for the IPO is set between Rs 440 and Rs 465 per share, with a minimum lot size of 32 shares. Retail investors can participate with a minimum investment of Rs14,880. For small non-institutional investors, or sNII, the minimum lot size is 14 lots, or 448 shares, requiring an investment of Rs 2,08,320, while for non-institutional investors, or NII, the minimum lot size is 68 lots (2,176 shares), amounting to Rs 10,11,840. The allotment of shares is expected to be finalised on Aug. 9, and the tentative listing date on the BSE and NSE scheduled for Aug. 13.

• Issue opens: Aug. 6.

• Issue closes: Aug. 8.

• Issue price: Rs 440-465 per share.

• Total issue size: Rs 4,193.73 crore.

• Fresh issue: Rs. 3.58 crore

• Offer for sale: Rs. 5.44 crore

• Bid lot: 32 shares.

• Listing: BSE and NSE.

The company proposes to utilise the net proceeds to finance the following purposes:

• Expenses of the company for the establishment of new modern stores under the "BabyHug" brand and the 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 setting up new modern stores under the FirstCry brand and other house brands of the company, and lease payments for the existing identified modern stores owned and controlled by Digital Age in India

• Investment in subsidiary FirstCry Trading: For its overseas expansion by establishing new modern stores

• Investment in subsidiary Globalbees Brands: For the acquisition of an additional stake in its subsidiaries

• Sales and marketing initiatives

• The costs associated with technology and data science, which include cloud and server hosting, are significant.

• Financing of inorganic growth through acquisitions, other strategic initiatives and general corporate purposes.

Brainbees Solutions, known for its brand FirstCry, aims to become a comprehensive destination for parents by catering to their retail, content, community engagement, and education needs. The company provides a wide range of products for children from infancy to 12 years old, including clothing, footwear, baby gear, nursery items, diapers, toys, and personal care products. Brainbees Solutions offers merchandise from Indian third-party brands, international brands, and its own labels. With a diverse selection for mothers, babies, and kids, the company boasts over 1.5 million SKUs from more than 7,500 brands on its multi-channel platform, covering categories such as apparel and fashion, toys, books, school supplies, diapers, bath and skincare, nutrition and breastfeeding, health and safety, baby gear, and maternity wear, as of Dec. 31, 2023.

Brainbees Solutions has shown significant growth in its revenue over the past few years, increasing from Rs 1,603 crore in fiscal 2021 to Rs 5,633 crore in fiscal 2023. For the nine months ended Dec. 31, 2023, the company reported a revenue of Rs 4,814 crore. Despite this growth, the company's Ebitda has fluctuated, with a notable improvement in the nine months ended Dec. 31, 2023, achieving a positive Ebitda of Rs 37 crore and an Ebitda margin of 0.80%. This is a significant recovery from the negative Ebitda of Rs 263 crore and an Ebitda margin of -4.70% in fiscal 2023.

However, Brainbees Solutions continues to face challenges in profitability, recording a net loss of Rs 278 crore for the nine months ended Dec. 31, 2023, compared to a net loss of Rs 486 crore in fiscal 2023 and Rs 79 crore in fiscal 2022. The company's financial performance indicates a strong revenue growth trajectory but highlights the need for continued efforts to achieve consistent profitability.

1. Operational and Financial: Future growth and strategy execution may face challenges, with auditor concerns and lender restrictions limiting flexibility.

2. Regulatory and Compliance: Previous non-compliance with the Companies Act 2013 risks future regulatory issues affecting operations and reputation.

3. Financial: Historical negative cash flows and unsecured loans pose financial and liquidity risks.

4. Business and Legal: Reliance on non-exclusive third-party brands and key personnel, along with ongoing litigation, could harm reputation and operations.