IPOs | Latest IPOs News | Upcoming IPOs | Brainbees Solutions Limited | IPO advise | IPO call | IPO recommendation | IPO allotment Status| Financials | Shareholding

Industry : Retailing

Brainbees Solutions Limited View all IPOs

Price Band

Rs 440 – Rs 465

Brainbees Solutions (FirstCry) Limited is going public with a fresh issue and an offer for sale. The issue opens on 06th August 2024.

MOJO CALL

Why

MOJO CALL

Avoid

Neutral

India’s largest multi-channel retailer for Mothers’, Babies’ and Kids’ products

Founded in 2010, the company has grown into the largest multi-channel retail platform for products aimed at mothers, babies, and kids. It initially launched as an online platform and soon expanded into physical stores under the brands "FirstCry" and "BabyHug." As of March 31, 2024, the company operated 435 company-owned company-operated (COCO) stores and 628 franchisee-owned franchisee-operated (FOFO) stores nationwide.

Globalbees Brands could unlock value

A key subsidiary of the company, Globalbees Brands, in which the company holds a 50.23% stake, specializes in funding and acquiring direct-to-consumer (D2C) businesses across various categories, including home utilities, fashion/lifestyle, appliances, and beauty/personal care. These investments in early-stage D2C companies have the potential to yield significant returns and unlock substantial value for shareholders.

Reducing yet high dependence on Xpressbees for logistics

The company heavily relies on Xpressbees for its logistics needs. In FY2024, 57.3% of the total logistics costs were attributed to Xpressbees, down from 82.8% in FY2022. Additionally, Supam Maheshwari, the Managing Director and CEO of Brainbees, serves as a director on the board of Xpressbees, which could present a potential conflict of interest.

Valuations

Based on FY2024 financials, the company is loss-making asking for a market cap-to-sales ratio of 3.7x. Such a valuation is justified for a fast-growing company with potential for unlocking value through its funding and investment arm. We, therefore, suggest subscribing to the issue.

Issue Details

Issue Opens	06th August 2024
Issue Closes	08th August 2024
Price Band	Rs 440 – Rs 465
Issue size (Upper Band)	Rs. 4193.73 Cr
Issue Type	FRESH ISSUE & OFFER FOR SALE
Market cap (based on upper band)	Rs. 24141.75 Cr
Sales- March 2024 (Rs./Crs)	6480.9 Cr
Net Profit - March 2024 (Rs./Crs)	-321.5 Cr
Industry	Retailing
Promoters	-
Lead Manager	Kotak Mahindra Capital, Morgan Stanley, BofA Securities, JM Financial and Avendus Capital

Objective of the Issue

Details

Objectives of the Issue Offer for sale – Rs 2,527.73 cr & Fresh Issue – Rs 1,666 cr

The Objectives of the Offer are for:
1. To fund the expenditure for: (i) setting up new modern stores under the ‘BabyHug’ brand; and (ii) setting up a warehouse, in India – Rs 108.10 crore
2. To fund the expenditure for lease payments for the existing identified modern stores owned and operated by the company, in India – Rs 93.10 crore
3. To fund the investment in one of the company’s subsidiary, Digital Age for (i) setting up new modern stores under the FirstCry brand and other home brands of the company; and (ii) lease payments for the existing identified modern stores owned and controlled by Digital Age, in India – Rs 299.60 crore
4. Investment in one of the subsidiary, FirstCry Trading for overseas expansion by: (i) setting up new modern stores; and (ii) setting up warehouse(s), in KSA – Rs 155.60 crore
5. Investment in one of the subsidiary, Globalbees Brands towards acquisition of additional stake in our step-down Subsidiaries – Rs 169 crore
6. To fund the Sales and marketing initiatives by the company – Rs 200 crore
7. Technology and data science cost including cloud and server hosting related costs – Rs 57.60 crore.
8. Funding inorganic growth through acquisitions and general corporate purposes – Rs 583 crore

List of Shareholders Selling Their Stake

Name	Type	Value of Shares (in Rs)	% of OFS
SVF Frog (Cayman)	Institutional Investor	9,44,78,93,250	37%
Mahindra and Mahindra	Institutional Investor	1,30,48,70,910	5%
PI Opportunities Fund	Institutional Investor	3,99,96,00,780	16%
TPG Growth V SF Markets	Institutional Investor	1,81,32,79,125	7%
NewQuest Asia Investments III	Institutional Investor	1,92,55,84,995	7%
Apricot Investments	Institutional Investor	1,17,33,25,200	5%
Satyadharma Investments and Trading	Institutional Investor	9,19,66,305	0.4%
Schroders Capital Private Equity Asia Mauritius II	Institutional Investor	1,76,80,27,650	7%
Sage Investment	Institutional Investor	2,44,19,940	~0%
Pratithi Investment	Institutional Investor	10,44,91,080	0.4%

Business Operations

About Company

Brainbees Solutions operates India’s largest multi-channel retailing platform (in terms of GMV) for products catering to mothers, babies and kids through their proprietary “FirstCry” platform.

The company launched its “FirstCry” platform in India in 2010 with the goal to create a one-stop shop for all parenting needs. The company has since established presence in UAE and Saudi Arabia in 2019 and 2022, respectively.

The company offers products from third-party Indian brands, global brands and home-grown brands. Through deep data analysis, company has managed to develop and grow one of its own brands “BabyHug”, into the largest multi-category Mothers’, Babies’, and Kids’ products brand in India in terms of GMV in FY2024.

The company also operates through retail stores in India under the COCO and FOFO model. As of FY2024, the company operated 435 COCO stores and 628 stores through the FOFO model.

Segment Revenue Breakup

GMV Breakdown by Segment:
Segment	FY2024	FY2023	FY2022
Online	81%	80%	83%
Offline	19%	20%	17%

Financials

Financial Overview

The company’s revenue grew by 170% between FY2022 and FY2024 and stood at Rs 6,481 crore for FY2024.

In FY2024, the company’s Return on Net Worth stood at (8.65%), an improvement of 411bps from (12.76%) recorded in FY2023.

For FY2024, the operating margins for the company improved to 4.23%, from 1.33% recorded in FY2023 and 4.01% recorded in FY2022.

The company has failed to generate profits for the last 3 years. The company posted a loss of Rs 321 crore for FY2024, compared to a loss of Rs 486 crore in FY2023.

The company has failed to generate positive cash flow from operations for the last three years. The company reported a CFO of negative Rs 42 crore in FY2024.

The company has a debt of Rs 1,422 crore (including lease liabilities) as of 31st March 2024.

Financial Performance (Rs/crore)

Rs./Crs	FY 24	FY 23	FY 22
Revenue	6480.9	5632.5	2401.3
Net Profit	-321.5	-486.1	-78.7