The company is launching a ₹4,193 crore initial public offering (IPO), which includes a fresh issue of ₹1,666 crore and the rest being an offer for sale. While the company does not have an identifiable promoter, several institutional investors such as M&M, TPG Growth, Premji Invest and Softbank are divesting their stake. The issue represents 17.4% of the post-listing shareholding of the company. The proceeds from the fresh issue will be used to set up new, modern stores for its brands and warehouses.
Business
Founded in 2010, Brainbees operates three major business segments. The India business, with online platform as well as offline stores, account for about 70% of its total revenue, while overseas business (online platform in the UAE and Saudi Arabia) contributes about 12% of the revenue and GlobalBees house of brands (selling household, fashion, appliance and personal care products) has a 19% share. It operates 1,063 FirstCry and Babyhug modern stores in 533 cities in India. Across its channels, the company sells 7,580 brands, including its home brands, third-party Indian brands as well as overseas brands.
ETMarkets.comFinancials & Growth Prospects
The company’s revenue increased to ₹6,481 crore in FY24 from ₹2,401 crore in FY22. It reported a loss of ₹321.5 crore for FY24, down from ₹486 crore in FY23, after having increased from ₹79 crore in FY22. The adjusted Ebitda margin stood at 4.2% for FY24. Except its international business, other businesses are operationally profitable. The multi-channel and multi-business company has a large addressable market to cater to.
Valuations
At an implied market cap of more than ₹24,141 crore, the IPO values the loss-making company at nearly four times its FY24 revenue. This is a premium valuation for a highly diversified retail company. The track record of loss-making unicorns creating shareholder wealth on listing has been sketchy. Long-term investors can wait for Brainbees to make profits before investing.