FirstCry IPO sees lukewarm response from investors on Day 2; gets subscribed 30%
The FirstCry IPO did not have any promoters and consisted of a fresh issue of Rs 1,666 crore and an offer-for-sale of 5.42 crore equity shares by its existing shareholders.
Brainbees Solutions, the parent company of omnichannel maternity and babycare platform FirstCry, continued to attract tepid response for its initial public offering on day 2. The offering was only 30% subscribed, affected by global market volatility.
However, the retail portion of the IPO—which was subscribed 46% on day one—was fully subscribed by the end of the second day.
The non-institutional investors portion saw an underwhelming response with only 30% subscribed.
A mere 3% of the portion reserved for institutional buyers was subscribed, while the portion reserved for employees was subscribed 3.44 times. Institutional investors typically invest on the last day to gauge the overall market demand and for liquidity management.
However, even with tepid investor interest, brokerages are still betting on FirstCry's strong anchor subscription, along with increased spending on children's products, growth in international markets, an expanding retail presence, and the development of home brands.
Unnati Bhavekar (Jadhav), Lead Research Analyst at KR Choksey, attributed Brainbees's tepid performance to "recent global events in terms of geopolitical risks and devaluation of the yen and increased interest rate in Japan."
"Given that the price to sales multiple at the upper price band of 3.8X is at a much higher discount to more directly related peers (Online + Offline presence) like FSN E-commerce and Honasa, we assign SUBSCRIBE rating for this IPO," noted KR Chokesy in an IPO note.
FirstCry has set its IPO price band between Rs 440 and Rs 465 per equity share for its nearly $3-billion initial public offering (IPO). The company aims to list on domestic stock exchanges by August 11.
SoftBank will reduce its stake from 25% to about 20%, while Mahindra & Mahindra will participate in the offer-for-sale (OFS) component by selling 10% of its total shareholding. Notably, FirstCry does not have any promoters backing it, and its selling shareholders, with the exception of Schroders, will dilute approximately 11% of their total share capital through the OFS.
For FY24, the company reported revenue of Rs 6,480.9 crore and an adjusted EBITDA margin of 4.2%. However, it incurred a loss of around Rs 321 crore. During the same period, FirstCry had 91.1 lakh annual unique transacting customers and saw its gross merchandise value for India grow by 25.6% to Rs 9,121.1 crore in FY24.
(The story has been updated to reflect analysts comments.)
Edited by Kanishk Singh