BOFA Securities has initiated coverage on Brainbees Solutions, the parent company of FirstCry, with a ‘BUY’ rating and a target price of Rs 770. The investment firm cites FirstCry’s strong position in the less competitive Mother, Baby, and Kids (MBK) market, predicting a compound annual growth rate (CAGR) of 21% in revenue over the next few years.
According to BOFA, FirstCry is on track to deliver a 500 basis point improvement in its profit margins over the next three years. This margin expansion is expected to lead to an impressive adjusted EBITDA CAGR of 57% from FY24 to FY27.
BOFA attributes part of FirstCry’s success to its omni-channel strategy, which has been effective in lowering customer acquisition costs (CAC) while increasing the average order value (AOV) and order frequency. This model has allowed FirstCry to capture a larger share of the MBK market through both online and offline channels.
In addition to its core operations, BOFA notes that FirstCry’s international expansion and its affiliate, GlobalBees, have potential to deliver positive surprises in the coming years. The company’s diversified approach and growing presence in international markets could provide significant upside, further supporting the bullish outlook on Brainbees Solutions.
With these factors in play, BOFA Securities believes that FirstCry is well-positioned to capture greater market share and deliver strong financial performance, making it an attractive investment at its current valuation.
