Pune-based Brainbees Solutions is selling its shares at a price between Rs 440 and Rs 465 each. Investors can apply for a minimum of 32 shares and in multiples after that.
Check Out GMP Here| Brainbees Solutions IPO (Firstcry IPO) GMP
The initial public offering (IPO) of Brainbees Solutions, which is the parent company of Firstcry, is having a tough time attracting investors. On the second day of bidding, only 11 percent of the shares had been subscribed. The bidding started on Tuesday, August 6, and by Wednesday afternoon, August 7, investors had bid for only 24 percent of the available shares.
Brainbees Solutions aims to raise Rs 4,193.73 crore through this IPO, which includes a new share sale of Rs 1,660 crore and an offer-for-sale (OFS) of 5,43,59,733 equity shares.
As for the subscriptions, retail investors have shown more interest with their portion subscribed at 89 percent. Non-institutional investors (NIIs) have only subscribed to 20 percent, while qualified institutional bidders (QIBs) have shown minimal interest at just three percent. However, the employee portion was booked 3.09 times.
Founded in 2010, Brainbees Solutions provides products for mothers, babies, and kids through its online platform ‘FirstCry’. The company wants to be a one-stop shop for parents’ needs in shopping, content, community engagement, and education. It sells products from Indian brands, global brands, and its own brands.
The grey market premium for Brainbees Solutions has dropped amid the current market fluctuations. It was last seen with a premium of Rs 25-30 in the unofficial market, indicating a potential listing increase of about 5-6 percent for investors. Before the bidding opened, the premium was around Rs 85.
Brokerage firms are generally optimistic about the IPO and suggest that investors should consider it for the long term. They point to the company’s experienced management and strong market presence as positive factors. However, there are concerns about high valuations, ongoing losses, negative cash flows, and tough competition.
FirstCry is recognized as India’s largest retail platform for products for mothers, babies, and kids. The company has shown significant revenue growth and increased customer engagement through rising sales and app downloads. KR Choksey noted that FirstCry has a multi-channel approach and is effectively using content and technology to expand internationally. They recommend subscribing to the IPO because the price-to-sales ratio at the higher end is lower compared to similar companies.
Brainbees Solutions raised Rs 1,885.8 crore from anchor investors by allocating 4,05,55,428 shares at Rs 465 each. For the financial year ending March 31, 2024, it reported a net loss of Rs 321.51 crore on revenues of Rs 6,575.08 crore. For the previous financial year (2022-23), the net loss was Rs 486.06 crore on revenues of Rs 5,731.28 crore.
The company has set aside shares worth Rs 3 crore for eligible employees, who will receive a discount of Rs 44 per share. Of the total shares available, 75 percent are reserved for QIBs, while NIIs will get 15 percent and retail investors will receive the remaining 10 percent.
FirstCry has established itself in the market for mothers and young children and has a strong brand recall. While its business in India has been profitable with margins of 9 percent, its international operations are struggling. However, management believes they can replicate their success in India elsewhere.
Analysts expect that the market for mother and child care products will grow at a rate of 13-15% from FY24 to FY29. They note that FirstCry’s shares are priced lower than competitors based on their sales ratio. Given FirstCry’s leading position in this niche market, they recommend subscribing to the IPO for long-term investment.
Kotak Mahindra Capital, Morgan Stanley India, Bofa Securities India, JM Financial, and Avendus Capital are handling the IPO as book running lead managers. Link Intime India is managing the registration for this issue. The shares are expected to be listed on both BSE and NSE with a tentative date of August 13.
