Brace yourselves as the new year is here with exciting opportunities for you.
Are you an investor in the stock market, always on the lookout for new stocks? If yes, 2023 must have been a good year for you with so many IPOs. Well, it looks like 2024 will also be an exciting year for stock market investors, with IPOs lined up already.
One such opportunity is Firstcry’s upcoming IPO. Is this for you? Let’s figure it out through the article.
Who is Firstcry?
Firstcry India is an e-commerce brand established in 2010. It is the brainchild of Supam Maheshwari and Amitava Saha. The company is headquartered in Pune and has online and offline stores nationwide.
Firstcry started as a baby products brand. Today, it has products for kids and moms, too.
History
It was in 2010 when Supam was buying products for his child from foreign countries and realised the gap in India’s market for baby products. Upon giving it some thought, he recognised the opportunity to establish an online marketplace to give parents the access to best baby brands across the world. That is how Firstcry was born.
Also read: The economics behind the fun Indian toy industry
Objective
The company’s name represents a baby’s first cry, indicating that Firstcry is a brand committed towards baby products.
Firstcry aims to provide its customers with the best products at affordable prices and easy accessibility.
Firstcry today
Today, Firstcry is one of the most popular brands, especially among new parents and those with toddlers to teens.
Firstcry not only caters to the fashionable and traditional clothing needs of children but includes a diverse range of products covering health, education, gifts, footwear, games and more.
The company also operates preschools under the brand Intellitots, using a franchise model. It has more than 900 Firstcry stores in India, with over 2,000 employees.
Firstcry is now gearing up to launch its IPO in the initial months of 2024 under its parent organisation – Brainbees Solutions Limited.
Firstcry’s financials
(Amount in ₹ crores)
| Particulars | 2024 | 2023 | 2022 |
| Revenue from Operations | 6,480.8 | 5,632.5 | 2,401.2 |
| Expenses | 6,896.6 | 6,315.6 | 2,568.0 |
| Net Profit | (321.5) | (486.0) | (78.6) |
| Earnings per share (EPS) | (₹6.20) | (₹9.97) | (₹1.74) |
| EBITDA | 274.4 | 74.9 | 96.1 |
| Return on Networth (%) | (8.47) | (11.5) | (1.83) |
| Debt to equity ratio | 0.56 | 0.40 | 0.23 |
Source: FirstCry RHP
Firstcry’s IPO details
| Particulars | Details |
| IPO start date | August 6, 2024 |
| IPO end date | August 8, 2024 |
| Price band | ₹440-₹465 |
| Lot size | 32 shares |
| Face value | ₹2/- per share |
| Total Issue | ₹4193.7 crores |
| Fresh Issue | ₹1666.0 crores |
Source: FirstCry RHP
Shareholding pattern
Mr Ratan Tata, the founder of Tata Group, owned 77,000 preference shares in Firstcry. All the Firstcry shares held by Ratan Tata will be offered for sale in the upcoming IPO. Besides Mr Tata, the following is the list of shareholders holding less than 1% of shares before the IPO:
| Name of shareholder | Shareholding (%) |
| Anchor Partners | 0.13% |
| Apricot | 3.46% |
| Castle Investment | 0.06% |
| Pratithi Investment Trust | 0.39% |
| M&M | 10.97% |
| Satyadharma | 0.08% |
| Sage | 0.07% |
| SVG (Frog) Cayman Ltd. | 25.55% |
| Schroders Capital | 0.78% |
| NewQuest | 3.82% |
| PI Opportunities I | 4.90% |
| TPG | 4.94% |
| Other Individual investors | 66.16% |
Source: FirstCry RHP
Fund utilisation plan
The funds from the fresh issue will be used as below:
- ₹726 crores ₹820 crores towards setting up new modern stores and warehouses respectively, in KSA.
- ₹939 crores ₹142 crores towards setting up new modern stores under ‘BabyHug’ brand and warehouses respectively, in India.
- ₹931 crores towards lease payments of existing stores in India.
- ₹2,996 crores investment in subsidiary, Digital Age. Among this, ₹1,690 crores for new modern store setup & ₹1,306 crores for lease payment.
- ₹1,690 crores towards investment in Firstcry’s subsidiary, Globalbees.
- ₹2,000 crores towards sales and marketing initiatives.
- ₹576 crores towards technology and data science costs.
- The remaining funds based on the subscription will be spent on strategic initiatives for the brand’s growth.
Also read: Textile industry in India – The foundation of fashionable clothing trends
Should you invest in Firstcry’s IPO?
One of the advantages of investing in the IPO is that the company has no listed competitors, making Firstcry a unique stock to add to one’s portfolio.
Here is why you should consider investing
- According to the latest report by Redseer, Firstcry is the largest multi-channel, multi-brand retailer, selling products for mothers, kids and babies. Firstcry had a gross merchandise value of ₹91,211.28 million for the financial year of 2024.
- The brand has an exclusive platform for parents, helping them form a community of their own. With like-minded parents joining together, Firstcry has been able to retain existing consumers and also attract new ones.
- As part of retaining customers and getting new ones on board, Firstcry runs various campaigns and promotional activities. One of those activities is to provide gift hampers to new mothers through Firstcry’s engagement with hospitals and clinics.
- Firstcry has the credit of maintaining a diverse product portfolio. Apart from running various businesses related to children, they produce products under their home brand and also sell third-party products.
- Firstcry has shown consistent growth in terms of revenue.
Watch out for the below
- Despite the increasing revenue, Firstcry is burning cash because of a significant rise in expenses. If Firstcry does not plan its expenses well, the company may continue to be at a loss in the future years. This can impact Firstcry’s share price and EPS.
- Given that the brand focuses majorly on baby products, any defect or deterioration in quality can heavily impact the brand value, leading to the loss of loyal customers.
- The company earns considerable revenue from selling third-party brands. So, Firstcry must maintain healthy relationships with vendors. Any dispute or disagreement can result in a loss of revenue.
- Since Firstcry has an online presence, the company’s growth also relies on the growth of the e-commerce sector. Firstcry’s inability to adapt to changing consumer preferences in the future can affect the brand’s business.
Also read: Here’s everything you need to know about Ola Electric’s upcoming IPO
Bottomline
Firstcry is a unique offering to investors since the company has no listed competitors. However, the company has been incurring losses in the past years since there is a spike in expenditure. Hence, it is essential for investors to consider all the factors impacting Firstcry’s performance before making an investment decision.
