Shares of Asia’s largest e-commerce portal for baby and kids’ products surged over 7 percent to Rs.688.9 per share after reputed brokerage firms like Morgan Stanley and BofA Securities set a target price indicating potential upside growth.
Price Movement
In Thursday’s trading session, the parent company of First Cry, Brainbees Solution’s share price surged 7.35 percent, reaching an intraday high of Rs.688.9 per share from its previous close of Rs.641.7 apiece. The price has since retreated to Rs.654.9 per share.
What happened
Brainbees Solutions Limited secured a “Buy” rating from reputed brokerage and wealth management firm Morgan Stanley with a target price of Rs.818 per share, suggesting a potential upside of 20 percent from the current price.
Additionally, BofA Securities another renowned brokerage firm issued a “Buy” rating for Brainbees Solutions for a target price of Rs.770 per share, suggesting strong growth prospects for the stock with an upside of 12 percent.
The brokerages support the recommendation based on favorable industry conditions, strong distribution, a large portfolio of home brands, and supply chain capabilities.
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Rationale for the rating
BofA Securities noted that FirstCry is well-positioned in a less competitive mother and baby care (MBK) market and is projected to achieve a 21 percent revenue CAGR.
According to the brokerages, Brainbees Solutions is expected to see a 500 basis point margin improvement over the next three years, resulting in a 57 percent CAGR in adjusted EBITDA from FY24 to FY27.
The company’s omnichannel strategy is lowering customer acquisition costs and enhancing average order value and frequency. International expansion and GlobalBees offer additional growth opportunities.
Morgan Stanley highlights that FirstCry is well-positioned to leverage India’s expanding childcare market, supported by strong distribution, a broad portfolio of home brands, and robust supply chain capabilities.
The brokerage forecasts a 20 percent CAGR in childcare revenue and an increase in EBITDA margin from 5.2 percent in FY24 to 9.9 percent by FY27.
Recent Developments
Brainbees Solutions launched its IPO from August 6 to August 8, 2024, with a price band set between Rs.440 and Rs.465 per share. The IPO was oversubscribed by 12.22 times, raising approximately Rs.4,194 crores. On its debut on August 13, 2024, shares opened at Rs.651, a 40 percent increase over the issue price, and later reached a high of Rs.707.05.
The proceeds from the IPO will be used to establish new modern stores under the BabyHug brand, enhance warehouse capabilities, and invest in subsidiaries like Digital Age to support growth in both domestic and international markets.
Additionally, Brainbees Solutions recently expanded its international presence into two key markets: the United Arab Emirates and Saudi Arabia.
Financial Performance
In its latest financial update, Brainbees reported net sales of Rs.1,652 crores for Q1 FY25, a 13.2 percent increase from Rs.1,407 crores in Q1 FY24. Although the company remains unprofitable, it has reduced its net losses to Rs.76 crores in Q1 FY25, down from Rs.110 crores in Q1 FY24.
Shareholding Pattern
As of June 2024, the shareholding pattern of Brainbees Solutions Limited shows that promoters do not hold any stake, while Foreign Institutional Investors hold 7.4 percent. Domestic Institutional Investors and Retail Investors hold 15.5 percent and 66.6 percent, respectively.
Sachin Tendulkar, who invested Rs.10 crores in the company before its IPO, acquired 205,153 shares. Post-IPO, his stake appreciated to approximately Rs.13.82 crores, reflecting a gain of over 38 percent.
Company Overview
Brainbees Solutions, commonly known as FirstCry, is a prominent Indian e-commerce platform established in 2010, focusing on products for mothers, babies, and children. The company strives to be a comprehensive destination for parenting needs, providing over 1.5 million SKUs from more than 7,500 brands across diverse categories.
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Written by – Siddesh S Raskar
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