Brainbees Solutions stock to list today; can it deliver return like Ola Electric on stock market debut?

Brainbees Solutions, the parent company of Firstcry, is set to make its debut at the bourses on Tuesday and the company may deliver a decent listing pop to the investors if one goes by the signals from the grey market premium for the issue. Despite a muted response, the company is likely to see a rub-off effect of post-listing buying in the Ola Electric Mobility.
 

Ahead of its listing, Brainbees Solutions was commanding a grey market premium of Rs 85-90 per share, suggesting a listing pop of around 19-20 per cent for the investors. However, the GMP had tumbled to Rs 20 on the last day of the bidding on the back of muted bidding for the issue.
 

Firstcry, India's largest online retailer for baby and child care products, is set to make its stock market debut, whose IPO was subscribed 12.22 times, said Shivani Nyati, Head of Wealth at Swastika Investmart. While the absence of profitability precludes a traditional valuation metric like P/E, the company's market leadership and growth potential are undeniable, she said.
 

"Investors must weigh these factors against the ongoing financial challenges and competitive landscape before making investment decisions. The strong GMP indicates positive investor sentiment, but the market's reaction on listing day will depend on how investors assess the company's growth trajectory and risk profile," Nyati added.
 

The IPO of Brainbees Solutions ran between August 6 and August 8. The Firstcry's parent had offered its shares in the price band of Rs 440-465 per share with a lot size of 32 shares. The company raised a total of Rs 4,193.73 crore from its IPO, which included a fresh share sale of up to Rs 1,666 crore and an offer-for-sale (OFS) up to 5,43,59,733 shares.
 

The issue was overall subscribed a total of 12.22 times, thanks to the push from qualified institutional bidders (QIBs), whose quota was booked 19.30 times. The quota for non-institutional investors was subscribed 4.68 times. The portions reserved for retail investors and employees saw bidding for 12.22 times and 6.57 times during the three-day bidding process.
 

FirstCry excels in customer engagement through its integrated platforms. It benefits from strong network effects and efficient inventory management, but faces serious challenges. Despite a 15 per cent increase in revenue to Rs 6,575.1 crores in FY24, FirstCry reported a loss of Rs 321.5 crores with a significant rise in debt Rs 462.7 crores, said Akriti Mehrotra, Research Analyst at StoxBox.
 

"The current fund raise is focused on operational needs rather than debt reduction. Persistent negative cash flows, regulatory issues, and legal troubles add to its financial strain. Given these concerns, we had recommended an 'avoid' rating for the issue, with plans to reassess if financial conditions improve," she added.
 

Brainbees Solutions, Founded in 2010, offers products for mothers, babies, and kids via its online platform 'FirstCry'. It aims to create a one-stop store for parents' retail, content, community engagement, and education needs. The company offers products from Indian third-party brands, global brands, and its own brands.
 

Brokerage firms were mostly positive on the issue suggesting investors to subscribe to it for a long term. Kotak Mahindra Capital, JM Financial, Morgan Stanley India, Bofa Securities India, and Avendus Capital were the book running lead managers of the Brainbees Solutions IPO, while Link Intime India served as the registrar for the issue.