Firstcry IPO: FirstCry Files for IPO, Key Details Revealed in DRHP

Brainbees Solutions, the parent company of the popular online e-commerce platform FirstCry, has taken a significant step towards going public by filing an application for an initial public offering (IPO) with the Securities and Exchange Board of India (SEBI) on December 28, 2023. The Firstcry IPO has already generated substantial interest in the market, and here are 10 key points to know from the Draft Red Herring Prospectus (DRHP):

1. IPO Composition: The Firstcry IPO comprises the issuance of fresh equity shares worth ₹1,816 crore, along with an offer for sale by existing shareholders and promoters. Existing investors, including Mahindra & Mahindra (M&M), private equity firm TPG, NewQuest Asia, and SoftBank, plan to collectively sell 5.44 crore shares in Brainbees through an Offer for Sale (OFS) alongside the primary issue. Mahindra will sell its 0.58 percent stake, while SoftBank will offload 2.03 crore shares.

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Also Read: Ratan Tata to Fully Divest Stake in FirstCry Parent Company Ahead of IPO

2. Private Placement: The DRHP mentions that FirstCry may consider a private placement of shares to certain investors for up to ₹363.20 crore.

3. IPO Dates: The exact opening and closing dates for the IPO subscription have not been announced in the DRHP. However, media reports suggest that the public issue is likely to open in early 2024. The offer price and IPO price band have also not been disclosed.

Also Read: When Can a Company Go for IPO in India

4. IPO Reservation: The IPO will follow the book-building process, with a minimum of 75 percent of the issue allocated to qualified institutional buyers (QIBs), up to 15 percent for non-institutional investors (NIIs), and up to 10 percent for retail individual bidders.

5. IPO Objectives: The net proceeds from the IPO will be utilized to establish new retail stores, warehouses, and for international expansion.

Also read: FirstCry Parent Company Brainbees Files IPO Papers with SEBI; Prepares for Multi-Crore Stock Offering

6. About FirstCry: FirstCry, backed by SoftBank, is a leading provider of toys, apparel, and accessories for babies, kids, and mothers through both online and physical stores. As of June 30, 2023, the company offers over one million SKUs from more than 6,800 brands, with a mobile application that has been downloaded over 104 million times in India. It operates 936 FirstCry and BabyHug modern stores across India.

7. Financials: FirstCry reported a substantial increase in its net loss for FY23, with a 515% jump to ₹486 crore from ₹79 crore in FY22. This was primarily due to increased expenses. However, its revenue from operations for the financial year 2022-2023 surged by 135% to ₹5,633 crore from ₹2,401 crore in FY22, driven by strong demand. The company’s ROCE stood at -7%, while its EBITDA margin was at -2%. Income from the sale of products increased 2.37 times to ₹5,519 crore in FY23.

Also Read: Announced IPOs: Upcoming Big IPOs in India 2024

8. Competitors: FirstCry primarily competes with organized players in the India Childcare Products market, including online platforms like Amazon, Flipkart, Meesho, Hopscotch, Myntra, Ajio, and multi-brand retailers like Reliance Trends and Gini & Jony. Notably, there are no large organized specialty vertical multi-channel players in India’s Childcare Products market.

9. Industry Overview: India boasts the largest population of children globally, with approximately 309 million children under 12 years of age as of July 1, 2022. The per capita spending on childcare products in India is currently nascent, at ₹7,975 in the calendar year 2022, but is expected to grow at a CAGR of approximately 15% from 2022 to 2027, outpacing mature markets like the USA and China.

Also Read: Canara Bank Announces IPO Plans for Canara Robeco AMC, Expanding India’s Mutual Fund Landscape

10. Book-Running Managers: Kotak, Morgan Stanley, Bofa Securities, JM Financial, and Avendus have been appointed as the book-running lead managers for the IPO, while Link Intime India Private Limited will serve as the registrar of the offer.

Risks: The DRHP highlights potential risks, including expenses related to marketing, expansion, retail distribution, and stock options that could adversely impact FirstCry’s financial condition. The company also acknowledges the uncertainty of future customer growth.

As the Firstcry IPO progresses, investors and market enthusiasts will eagerly await further details, including the opening date, price band, and subscription process.

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