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FirstCry IPO: FirstCry is a leading omnichannel platform in India catering to mothers and babies. It offers a wide range of products and services through both online and offline channels, including apparel, toys, baby care products, educational resources, and parenting support.
The IPO: While not yet launched, FirstCry is actively preparing for its initial public offering (IPO). Here’s a look at the key details:
- Target Issue Dates: Reports suggest the DRHP (draft red herring prospectus) could be filed with SEBI by December 29th, 2023. Listing is expected after the 2024 Lok Sabha elections.
- Offer Size: FirstCry aims to raise around $500-$600 million through the IPO.
- Price Band: The valuation hasn’t been finalized, but the company could be valued at approximately $4 billion during the IPO.
News and Developments:
- Market Conditions: Recent reports indicate improving market conditions could pave the way for a successful IPO.
- SoftBank Stake Sale: SoftBank, a major investor, sold a portion of its stake in August 2023, possibly preparing for the IPO.
- Profitability Milestone: FirstCry turned profitable in 2021, boosting investor confidence.
- Competition: Nykaa’s successful IPO in 2021 raises the bar for FirstCry in the vertical e-commerce space.
Investor Sentiment:
FirstCry’s IPO is highly anticipated, especially given the thriving childcare market in India. The positive developments, combined with improving market conditions, suggest optimistic investor sentiment. However, factors like valuation and post-IPO performance of other new-age tech companies will also play a role.
FirstCry Company profile:
About FirstCry:
- Founded in 2010: FirstCry started as an online platform catering to the needs of mothers and babies in India.
- Omnichannel Presence: Over the years, it has expanded to an omnichannel retail giant, operating over 350 brick-and-mortar stores across 121 cities alongside its robust online platform.
- Market Leader: FirstCry is the clear leader in India’s mother and baby market, holding a dominant share of over 40%.
- Comprehensive Offerings: It offers a wide range of products, including apparel, toys, diapers, nursery furniture, and more, from over 600 international and Indian brands.
Key Milestones and Achievements:
- 2011: Launched physical stores, marking the transition to an omnichannel model.
- 2016: Achieved unicorn status with a valuation of over $1 billion.
- 2018: Acquired BabyOye, a key competitor, further solidifying its market position.
- 2021: Turned profitable for the first time, clocking a net profit of nearly Rs 216 crore.
- 2023: Raised around Rs 435 crore from three Indian family offices through a secondary sale, paving the way for its upcoming IPO.
Competitive Advantages and Unique Selling Proposition:
- Strong Brand Recognition: FirstCry is a household name in India, recognized for its quality products, competitive prices, and excellent customer service.
- Wide Product Range and Omnipresence: The company’s extensive product portfolio and presence across online and offline channels cater to diverse needs and preferences.
- Loyalty Programs and Community Building: FirstCry’s loyalty programs and initiatives like workshops and events foster a strong community of mothers, enhancing brand loyalty.
- Focus on Technology and Innovation: The company leverages technology for personalized recommendations, data-driven decision making, and seamless omnichannel shopping experiences.
Prominent Brands and Partnerships:
- FirstCry Private Label: Offers high-quality and affordable own-brand products across various categories.
- Partnerships with International Brands: Collaborates with leading international brands like Mothercare, Graco, and Chicco to bring global products to Indian parents.
- Strategic Alliances: Partnerships with hospitals, pediatricians, and parenting influencers further strengthen its reach and credibility.
FirstCry IPO: Financial Analysis
Recent Financial Performance:
- Revenue growth: Strong growth observed. In FY21, revenue jumped 141% to INR 1,740 Cr compared to INR 896.7 Cr in FY20. However, FY22 saw a decline, with revenue reaching INR 2,401.3 Cr, a 50% increase from FY21.
- Profitability: Fluctuating trend. FirstCry turned profitable in FY21 with a net profit of INR 215.94 Cr, reversing the loss of INR 190.8 Cr in FY20. But in FY22, the company slipped back into the red with a net loss of INR 78.7 Cr.
- Debt levels: Not readily available in public reports. However, the recent investment of INR 435 Cr by three family offices in SoftBank’s stake suggests moderate debt levels.
Industry Benchmarks:
Given the lack of public listing and detailed financial information, comparing FirstCry’s key ratios to industry benchmarks is challenging. However, some general observations can be made:
- Revenue growth: The initial FY21 growth of 141% seems promising and surpasses the average e-commerce growth rate in India. However, the slowdown in FY22 needs further analysis.
- Profitability: Fluctuations in profitability raise concerns about sustainability, especially the reversal to a loss in FY22. This needs to be closely examined before assessing the company’s financial health.
- Debt: Moderate debt levels are likely based on the recent investment, but more information is needed for a definitive assessment.
Future Growth Prospects and Earnings Drivers:
- Omnichannel strategy: FirstCry’s strength lies in its combined online and offline presence. Expanding the brick-and-mortar footprint across Tier 2 and 3 cities can drive growth.
- Private label brands: Launching and promoting private label brands with higher margins can improve profitability.
- Subscription services: Expanding subscription services like FirstCry BabyFirstClub can drive recurring revenue and customer loyalty.
- International expansion: Exploring markets like the Middle East and Southeast Asia with similar demographics can open new avenues for growth.
FirstCry IPO: Weighing Risks before Diving In
FirstCry, the Indian e-commerce giant focused on baby and parenting products, has been contemplating an IPO for some time, but the journey hasn’t been smooth. While the potential growth in the mother and baby care market is enticing, a closer look reveals several risks and concerns investors should carefully consider before diving into the IPO.
Market Volatility:
- Global Market Downturn: The current global economic climate is marked by volatility and a possible recession on the horizon. This can lead to investor risk aversion, making it challenging for new IPOs to gain traction and secure desired valuations.
- Negative sentiment in Indian IPOs: Recent tepid responses to IPOs like Delhivery highlight a cautiousness among investors towards Indian equities. FirstCry needs to navigate this sentiment effectively.
Industry Headwinds:
- Intense competition: The baby and parenting products market is fiercely competitive, with major players like Amazon, Flipkart, and Nykaa aggressively vying for market share. Standing out and maintaining margins amidst competitive pressure can be tough.
- Macroeconomic factors: Inflation and rising interest rates could impact consumer spending on non-essential items like baby products, potentially affecting FirstCry’s revenue growth.
Company-Specific Challenges:
- Profitability concerns: Though FirstCry claims to be EBITDA positive, it has historically reported losses. Investors need to scrutinize the path to sustained profitability and the factors driving operational expenses.
- Heavy investor reliance: Dependence on a few large investors like Premji Invest and Mahindra Retail makes the company vulnerable to their exit strategies and changing investment appetite.
- Brand perception: While FirstCry is well-known in the online space, its offline presence is limited. Building a strong omnichannel brand presence requires significant investment and strategic execution.
Financial Health Analysis:
- Conduct thorough due diligence: Carefully examine FirstCry’s financial statements, past performance, growth projections, and future plans. Assess their ability to handle debt, manage inventory, and adapt to changing market dynamics.
- Look for red flags: Scrutinize any inconsistencies, unexplained losses, or over-optimistic projections in the financial data. Be wary of aggressive accounting practices or excessive reliance on one-time gains.
Investment Advice:
- Research and compare: Evaluate FirstCry against its competitors and benchmark its financial performance against similar companies.
- Seek professional guidance: Consult financial advisors for personalized recommendations and risk assessment based on your individual investment goals and risk tolerance.
- Stay informed: Keep yourself updated on market trends, industry news, and FirstCry’s developments post-IPO. Don’t hesitate to adjust your investment strategy based on new information.
Also Read: How to Apply for an IPO?
