FirstCry shares surge 7% after BofA, MS initiate coverage, see up to 27% upside scope

FirstCry shares surge 7% after BofA, MS initiate coverage, see up to 27% upside scope

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Shares of Brainbees Solutions, the parent company of FirstCry, rallied 7% to the day’s high of Rs 688.90 on Thursday after global brokerages BofA and Morgan Stanley initiated coverage on the stock, signaling upside potential of up to 27%.

Morgan Stanley has an overweight rating on the stock, while BofA has a buy rating with target prices of Rs 818 and Rs 770, respectively.

Here is a brief note of what the global brokerages have to say on the future prospects of the stock:

Morgan Stanley: Overweight | Target price: Rs 818 | Upside potential: 27%

The global brokerage firm said that the company is a quintessential play on FirstCry and is well placed to capitalize on India’s growing childcare market. There are multiple levers of growth and profitability improvement in place. Morgan Stanley sees some option value through Globalbees Brands. Despite strong share-price performance since listing, current valuations indicate further upside. The foreign brokerage firm benchmarks Brainbees stock against Indian consumer discretionary stocks given the similarities in growth and steady-state EBITDA margin profiles.

Growfast

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BofA: Buy| Target price: Rs 770| Upside potential: 20%

BofA believes that the company is competitively well positioned in a rational MBK market and has multiple levers across businesses with a clear path to profitability. The fundamentals in all businesses are improving and the margins may surprise. FirstCry is a niche vertical online commerce platform and has presence in the Middle East and with private labels and offline stores. India remains one of few larger economies that has a better birth rate vs China/US.

Brainbees listing and performance

The shares of Brainbees Solutions debuted on the exchanges earlier in the month of August at Rs 651 on NSE and Rs 625 on BSE against an issue price of Rs 549.

Till date, the stock has increased by 25% from its issue price.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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