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Brainbees Solutions, the operator of the popular online platform FirstCry, is set to make its debut on the stock exchanges on August 13. The shares are anticipated to list with a double-digit premium over the issue price of ₹465 per share. This expectation is based on the healthy subscription numbers for the initial public offering (IPO) and the current trading in the grey market.
The grey market, an unofficial trading platform for IPO shares before their official listing, indicates a premium of around 15 percent for FirstCry shares. The IPO, which was open from August 6 to August 8, received a robust response, being subscribed 12.22 times overall. Qualified institutional buyers showed significant interest, subscribing 19.30 times their allocated portion, while non-institutional investors and retail investors subscribed 4.68 times and 2.31 times their respective portions.
The company raised a total of ₹4,194 crore through the IPO, comprising a fresh issue of ₹1,666 crore and an offer-for-sale of 5.4 crore equity shares valued at ₹2,528 crore by existing shareholders. Despite the promising initial figures, experts advise caution. Akriti Mehrotra, Research Analyst at StoxBox, highlights that although a 15 percent to 18 percent premium is expected at listing, investors should be wary of the company’s ongoing financial difficulties.
FirstCry reported a 15 percent increase in revenue to ₹6,481 crore for FY24, but also incurred a loss of ₹321.5 crore, which, though improved from the previous year’s loss of ₹486 crore, is coupled with rising debt. The funds from the IPO will be allocated to setting up new stores, warehouse expansion, lease payments, and investment in subsidiaries, rather than debt reduction.
Narendra Solanki from Anand Rathi Shares and Stock Brokers echoes the sentiment that while the company’s shares are expected to list at a premium, the high valuation and financial challenges suggest a need for cautious optimism.