Rajeev
FirstCry, the SoftBank-backed omnichannel retail startup, is making waves as it gears up for an Initial Public Offering (IPO). Filing its draft red herring prospectus (DRHP) with market regulator SEBI, the startup aims to raise a whopping INR 1,816 Cr through fresh share issues, including an offer-for-sale component allowing investors to sell up to 5.4 Cr equity shares.
FirstCry, under the umbrella of Brainbees Solutions Limited, recorded robust financials with consolidated sales reaching INR 1,406.9 Crore in the initial quarter of FY24. The significant chunk of these revenues was driven by the sales of babycare products on its platform. This figure accounts for nearly 25% of its entire FY23 sales.
In the fiscal year 2022-23, FirstCry witnessed a substantial surge in its consolidated operating revenue, soaring to INR 56,32.5 Crore. This marked a remarkable 135% upturn compared to the preceding fiscal year.
In the financial year 2022-23, the overall income of the startup, encompassing additional revenue streams, amounted to INR 5,731.2 Crore. This showcased a significant upswing of 127.7% compared to the INR 2,516.9 Crore recorded in FY22. However, with growth comes challenges, and in Q1 of FY24, FirstCry incurred a net loss of INR 110.4 Cr, underlining the complexities of scaling operations.
Spending Dynamics: Where Did FirstCry Allocate Resources?
Analyzing the financials for the first quarter of FY24, FirstCry’s outlay amounted to INR 1,541.8 Crore. This aligns with a pattern of escalating expenses, as witnessed in the preceding fiscal year, where the total expenditure surged by 145%, reaching INR 6,315.6 Crore compared to INR 2,568 Crore in FY22. This follows a trend of increased spending, with the previous fiscal year’s total expenditure reaching INR 6,315.6 Cr, a substantial 145% surge from INR 2,568 Cr in FY22.
Breaking down the expenses, procurement cost remains a significant component for FirstCry, constituting almost 59% of total expenditure in Q1 FY24, amounting to INR 904.4 Cr. This signifies a rise of 150%, surpassing the expenditure of INR 1,572.1 Crore incurred in FY22. As a marketplace, investing in product procurement is crucial for FirstCry’s business model.
Employee benefit expenses, including ESOP costs, amounted to INR 159.2 Cr in Q1 FY24. This marked a 127% increase from the previous fiscal year, where the startup spent INR 769.8 Cr in FY23, emphasizing its commitment to human capital.
Advertising expenses also play a pivotal role, with FirstCry allocating INR 164.5 Cr in Q1 FY24, representing almost 10% of the startup’s revenue for the period. This represents a growth of 55%, exceeding the expenditure of INR 268.6 Crore in FY22. Strategic marketing efforts remain a key driver for sustaining FirstCry’s market presence.
IPO Offering and Stakeholders’ Involvement
FirstCry’s IPO offering includes an offer-for-sale (OFS) element, allowing stakeholders to sell up to 5.4 Cr equity shares. Significantly, SoftBank, with a stake of more than 25%, intends to sell a maximum of 2 crore equity shares, while Premji Invest aims to divest 8.6 million shares through the OFS. Founder Supam Maheshwari will also partake in the IPO, although he won’t be selling shares in the OFS.
With 321 modern stores and 615 franchise-owned stores nationwide, FirstCry has positioned itself as a prominent player in the retail landscape. Joining the league of Indian startups eyeing IPOs, FirstCry’s journey exemplifies the potential for growth and market consolidation.
As we await further developments in the startup’s IPO journey, FirstCry’s story unfolds as a testament to resilience, adaptation, and strategic evolution in the competitive landscape of omnichannel retail.
Conclusion: Nurturing Growth, Welcoming Challenges
FirstCry’s foray into the public market signifies a significant milestone in its trajectory. The startup’s robust financials, coupled with strategic spending and stakeholder involvement, position it as a formidable contender. As it prepares to take the next step, FirstCry exemplifies the spirit of Indian startups navigating complexities, fostering growth, and carving a niche in the global business landscape.
