FirstCry shares hit 1-yr low post Q3 results; brokerage maintains 'Buy' but cuts target price

Shares of Brainbees Solutions Ltd, the parent company of baby products retailer FirstCry, plunged 9.55 per cent in Monday's trade to hit a 52-week low of Rs 244 after the company reported its third-quarter results.

Brokerage JM Financial maintained its 'Buy' rating on the stock but sharply cut its target price to Rs 390 for March 2027, from Rs 460 earlier, citing near-term growth and margin pressures.

In its note, JM Financial said FirstCry delivered India Multi-channel (IMC) revenue growth of 9 per cent year-on-year (YoY), which was impacted by heightened competitive intensity in the diapering category and procurement issues in third-party consumables brands. International business growth also slowed, rising 7 per cent YoY amid elevated promotional activity by horizontal players.

On the other hand, GlobalBees remained relatively stable, posting revenue growth of 22 per cent YoY, with its core categories sustaining a stronger 30 per cent growth.

At the consolidated level, gross margin declined 220 basis points (bps) YoY to 34.8 per cent, largely due to increased discounting in the IMC segment and a drag from non-core GlobalBees brands. However, operating leverage in employee and marketing expenses helped limit the compression in adjusted EBITDAM, which remained largely flat at 6.3 per cent.

JM Financial noted that while near-term growth and margins are likely to remain under pressure, the management has reiterated confidence in a sequential recovery. The expected improvement is to be driven by structural initiatives such as RocketBees, FirstCry Qwik and portfolio realignment in offline stores.

Despite trimming its target price, the brokerage said it continues to see value in the stock at current levels.