Brainbees Solutions Ltd IPO | News | Overview | Verdict

IPO listed on 13 Aug'24

Brainbees Solutions Ltd

Minimum Investment

₹ 14,880 / 32 shares

Grey market premium

₹ 44 (9.5% premium)

Issue price

₹ 465

Listing price

₹ 651

Listing gains

186 (40%)

Listing on

Aug 13, 2024

Our Verdict:

Avoid

Brainbees Solutions Ltd (BSL), India's largest online retailer for baby and child care products, is recognized for its solid brand reputation, customer loyalty, and engagement. It turned EBITDA-positive in FY24 and witnessed a revenue growth of 15% CAGR over the past two years.
However, the company has encountered financial challenges, with consistent losses and negative cash flows over the past three years and it is expected to sustain losses in the near future as well. Its investment in new ventures like International Baby Care and Globalbees will further strain its profit and loss statements. Additionally, the uncertain macroeconomic climate may affect the initial performance of its IPO.
Nonetheless, the future appears promising as BSL’s scalable business model is well-positioned to capture a substantial market share. Given these factors, long-term investors should keep this stock on their radar and monitor the company's performance over the next two quarters.

About the company

Founded in

17 May'10

Managing director

Supam Maheshwari

BSL serves the needs of expecting mothers, babies, and children through its online platform, 'FirstCry.' It provides a comprehensive range of products for infants and children up to 12 years old, including clothing, footwear, baby gear, nursery items, diapers, toys, and personal care products. The product range features a mix of Indian third-party brands, global brands, and proprietary brands.
As of March 31, 2024, the FirstCry mobile app had achieved over 127 million downloads in India. Additionally, the firm operates 1,063 modern retail stores (435 company-owned and 628 franchise-owned) across 533 cities, making it the largest in retail space and footprint among specialty retailers for mothers, babies, and kids in India.

STRENGTHS

Market Leadership: BSL stands as India's largest multi-channel retail platform for products targeted at mothers, babies, and kids as measured by GMV (gross merchandise value) for FY24, and is expanding its reach in select international markets.
Extensive Product Range: BSL boasts an extensive range of over 1.6 million SKUs from more than 7,500 top domestic and international brands, catering to a wide demographic from expecting mothers to children aged 6-12 years.
Customer Loyalty: The loyalty and repeated patronage of BSL's customers are evident, with ~70% of its GMV generated from existing customers, underscoring strong consumer stickiness and brand affinity.

RISK FACTORS

Weak Track Record: BSL has consistently reported net losses in recent years, compounded by negative operating cash flows due to ongoing losses and substantial working capital needs.
High Employee Turnover: BSL faces significant challenges with high employee turnover, with an attrition rate of ~40% for the past three years. These issues may indicate broader problems with employee retention.
Rising Debt Levels: BSL's debt has escalated significantly, growing from Rs 51 crore in FY22 to Rs 229 crore in FY24.
Investment Risks: Funds from the recent issue will be allocated to subsidiaries that are currently unprofitable and to some new ventures. There is no guarantee that these investments will lead to profitability or meet expected outcomes.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 4,193.73 crore

Fresh Issue

₹ 1,666 crore

OFS

₹ 2,527.73 crore

Price range

₹ 440 - 465

Lot size

32 shares

Issue Objective

BSL plans to utilise the net proceeds from the fresh issue for the following purposes:

Establish and modernize "BabyHug" stores and a warehouse in India;
Make lease payments for owned stores in India;
Invest in subsidiary, Digital Age, for new stores and lease payments;
Fund subsidiary, FirstCry Trading, for international expansion, including new stores and warehouses;
Invest in Globalbees Brands to acquire additional stakes in subsidiaries;
Finance sales and marketing initiatives;
Cover technology and data science costs, such as cloud and server hosting;
Support inorganic growth through acquisitions and strategic initiatives; and
General corporate purposes.

Dates

Bidding open

6 Aug'24

Bidding close

8 Aug'24

Allotment date

9 Aug'24

Refund date

12 Aug'24

Listing

13 Aug'24

IPO Reservations

Qualified institutional buyers

>75%

Non-institutional investors

<15%

Retail individual investors

<10%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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