Why brokerage cut target by 33% of this baby products retailer's stock - Check new share price

JM Financial Institutional Securities has downgraded Brainbees Solutions Ltd, the parent of omnichannel baby products retailer FirstCry, to 'Add' from 'Buy'. "FirstCry India-multichannel has witnessed a prolonged phase of subdued operating performance, with muted growth over the past four quarters now being followed up with depleting margins," the domestic brokerage stated.

"While external factors such as muted consumption, fulfilment troubles and procurement issues have played a role, rising competitive intensity and incremental investments in captive logistics are likely to curtail future earnings growth. Furthermore, International segment continues to be rampaged by geopolitical tensions, while GlobalBees will see another couple of quarters of writeoff in non-core brands," JM Financial added.

"With a cloudy near-term and limited visibility on margin expansion, we downgrade the stock to 'ADD' with a sharply revised Mar'27 TP (target price) of Rs 260," the brokerage also said. Its previous assigned 12-month target was Rs 390, implying a price cut of 33.3 per cent.

JM Financial highlighted that the company has delivered tepid growth across key segments over the past three to four quarters, largely missing Street expectations. India Multi-channel (IMC) gross merchandise value (GMV) growth has moderated to high single-digit levels, lower than earlier mid-teens expectations.

"In 1Q26, there was slowdown in offline business and impact from closure of COCO stores. In 2Q26, muted growth was mainly attributed to delayed consumption due to GST reforms. In 3Q26, softer demand environment, heightened competitive intensity in diapers (15 per cent of IMC GMV) and geopolitics-related procurement disruptions of 3P brands led to muted growth. While offline business started recovering in 3Q, headwind in online business still continues. Similarly, International segment is seeing heightened competitive intensity, leading to single digit growth in the last 3 quarters," JM stated.

Looking ahead, the brokerage expects the near-term outlook to remain challenging.

"4Q26 also appears muted, with heightened competitive intensity in the diapering category likely resulting in incremental discounting, thereby putting further pressure on margins. Additionally, procurement-related issues in few 3P consumables categories continue to persist. The company is also stepping up investments in its in-house logistics initiative, RocketBees, aimed at improving customer experience and reducing reliance on 3PL partners, which could weigh on near-term profitability," it further said.

Shares of Brainbees Solutions were last seen trading 1.36 per cent lower at Rs 243.45 in Thursday's session.