FirstCry IPO: Valuation, Future Growth and Expert Predictions

FirstCry has announced the initial public offering (IPO). The upcoming IPO will start on August 6 and ends on August 8, 2024. This article will cover the overview and some sort of analysis for FirstCry IPO based on the market insights and investors sentiment and also discuss about the valuation, the company’s anticipated growth, and expert predictions for the FirstCry IPO, offering a detailed insight for prospective investors.

FirstCry IPO has allocated at least 75% of the shares to qualified institutional buyers (QIB), and up to 15% of shares  to non-institutional investors (NII), and a maximum of 10% to retail investors in the initial  public offering. The portion reserved for employees includes ₹30 million worth of equity shares. Eligible employees taking part in the employees reservation portion of the bidding process can avail a discount of ₹44 per equity share.

About the Company

Brainbees Solutions, Firstcry aims to make one central place for parents, meeting their needs for retail, content, community engagement, and education. The company offers several unique products for babies and children up to age of 12 years old, such as apparel, footwear, baby gear, nursery products, diapers, toys, and personal hygiene products and  offers products from Indian third-party brands, global brands, and its own brands for sale. The company offers a diverse selection of products for mothers, babies, and kids from 7,500 brands on its multi-channel platform, with over 1.5 million SKUs across different categories involves clothing, toys, books, school supplies, diapers, bath and skincare, nutrition and breastfeeding, health and safety, baby gear, and maternity wear.

The introduction of BabyHug, a brand under Brainbees Solutions (Firstcry), clearly demonstrates the successful reputation and loyalty of the company. According to a RedSeer report, this brand leads in sales of mother, baby, and kids items in India based on GMV for the year ending December 2023.

FirstCry: Products & Services

FirstCry provides a diverse selection of items for infants and children, such as Diapers, Apparel, Playthings, Baby carriages, Child car seats, Pregnancy products, Nourishing products, Infant hygiene products, Household safety products.

FirstCry offers products from both local and foreign brands for sale. FirstCry features its product portfolio by popular brands including Pampers, Huggies, MamyPoko Pants, Johnson's Baby, Dove Baby, Cetaphil Baby, Chicco, Graco, Disney.

Valuation and IPO Details

BrainBees Solutions Ltd, the parent company of FirstCry, has an IPO valuation of around $2.9 billion. The Price band for the FirstCry Share Price is ₹440 to ₹465. This valuation is almost the same as its previous valuation of $2.8 billion. The goal of the company is to raise around ₹1,666 crore by issuing new shares, along with an OFS of up to 54 million shares, resulting in a total issue size of ₹4,187 crore. FirstCry's market capitalization reached ~₹22,475 crore ($2.68 billion).

IPO Open Date	August 6, 2024
IPO End Date	August 8, 2024
Listing Date	August 13, 2024
Allotment Date	August 9, 2024
Face Value	₹2 per share
Issue Size	90,187,690 shares
Lot Size	32 shares
Price Band	₹440 -₹465 per share

Funds Utilization from the FirstCry IPO Proceeds

The  FirstCry company plans to use these funds to cover costs for building a modern new facility and a warehouse in India. The proceeds are also  allocated for lease payments on their existing modern stores, as well as for investments in their subsidiary.

Financial Performance

FirstCry has demonstrated encouraging growth in the past few years. During FY24, the company saw a 15% growth in operating revenue, reaching ₹6,481 crore. The company lowered its losses by 34%, resulting in them falling to ₹321 crore in that time frame. The company's consistent growth trajectory and operational efficiency are evidenced by this financial performance. Equipped with a robust omnichannel strategy, FirstCry has more than 1,000 physical stores throughout India, making it ready to take advantage of the increasing demand for baby and mother care items.

Expert Predictions

There is a mixed opinion among experts regarding the valuation of FirstCry's upcoming  IPO. Some professionals think that the lower valuation is a strategic tactic to attract both institutional and retail investors. The strong surge in revenue and higher EBITDA margins well for the company's future performance. Nevertheless, questions have been raised regarding the competitive environment and the company's capacity to sustain its growth path in the future.

FirstCry Share Price and Pre-IPO Details

As of August 02, 2024, the FirstCry unlisted shares of BrainBees Solutions Pvt Ltd. are being traded at ₹225 per share. FirstCry Pre IPO shares are traded on NSDL and CDSL. Each FirstCry share is worth ₹10 in terms of its face value. The price band for the IPO has been disclosed in the DRHP documents.

Funding and Growth

FirstCry has raised over more than $741 million in funding from well-known investors like SoftBank, SAIF Partners, and Sequoia Capital India, across 11 rounds. The company has launched a wide variety of private label brands, providing unique baby and maternity items under its own name. This approach has enabled FirstCry to serve a wide range of customers and stay ahead in the competitive market.

Offline Presence and Additional Services

In addition, from its online platform, FirstCry operates a chain of more than 400 brick-and-mortar stores throughout India. The company provides a range of services such as parenting guidance, baby registries, and party coordination to improve its value offering to customers.

Notable Investors and their Gains

Former Tata Sons chairman Ratan Tata and Mahindra & Mahindra Limited are notable investors in FirstCry. Ratan Tata owns 77,900 shares in FirstCry that were purchased at an average cost of Rs 84. Tata's current offer price has resulted in gains of over 5 times. Mahindra & Mahindra Limited, owning 11% of FirstCry, will experience substantial gains as well, with its holdings increasing nearly sixfold in value. The mean cost of purchasing was Rs 77 per share.

Investors	Shares Owned	Purchase Price (in ₹)	Current Offer Price (in ₹)	Gains( in times X)
Ratan Tata	77,900	84	465	5X
Mahindra & Mahindra Ltd.	11% ownership	77	465	6X

Regulatory Hurdles and Resolutions

FirstCry's journey to the IPO has encountered some bumps along the way. Brainbees Solutions first submitted its DRHP IPO documents to India's Securities and Exchange Board (SEBI) in December. However, they retracted the documents when SEBI requested further clarification on key performance indicators (KPIs). SEBI  asked to include 25 KPIs but the company only included 5-6 in its filings earlier. After additional clarifications and modifications, the IPO is now scheduled to move forward.

Conclusion

The FirstCry IPO allows investors to participate in the success story of a prominent retail brand. FirstCry is well-positioned to make a significant impact with robust finances, a defined plan for growth, and support from prominent investors.  FirstCry IPO approaches, and getting attention will be focused on the FirstCry share price and the market's reaction to the highly anticipated offering. Investors seeking a way to invest in the expanding Indian retail sector may consider adding First Cry in their investment portfolio.