FirstCry CEO Supam Maheshwari On IPO, India Growth Outlook | IPO KYC | CNBC TV18

Summary

In this interview, Supam Maheswari, founder of FirstCry, discusses the company's growth and profitability in the baby products market in India. With a large and growing market, FirstCry has been profitable for the last four years and aims to improve gross margins. Maheswari outlines the company's strategy for international expansion in the UAE and Saudi Arabia and its Global Bees initiative, which includes investments in various direct-to-consumer brands. He expresses confidence in replicating India's success in these new markets and the potential for profitability and growth.

Takeaways

• 🚀 FirstCry is a leading brand in the child care and baby products market in India, founded by Supam Maheswari in 2010.
• 📈 The company has experienced significant growth, with the Indian baby care market expected to reach $68 billion by CY28, growing at a rate of 20%.
• 💰 FirstCry's India multi-channel business has been profitable for the last four years, with an adjusted EBITDA of around 88.8% for FY24.
• 📊 The company's gross margins have historically ranged between 30-35%, which is lower than the 40% minimum for listed retailers, but have been improving year-on-year.
• 🛒 FirstCry aims to improve its gross margins through better assortment mix, curation, investment in brands, and home brand strategies.
• 🌐 The business is divided into the Indian market, which contributes about 70% of revenues, international presence in UAE and Saudi Arabia, and a portfolio of brands under Global Bees.
• 📊 In FY24, FirstCry reported slower growth in India with a revenue increase of just 7%, and adjusted EBITDA margins between 8.5% to 9%.
• 🌍 The company has a plan to expand its international presence, starting in UAE in 2019 and Saudi Arabia in 2022, with a goal to turn around the business faster than it did in India.
• 🛍️ Global Bees, a portfolio of brands founded by FirstCry, has been incorporated back into FirstCry, focusing on categories beyond mother, baby, and kids.
• 📈 Global Bees has shown growth, achieving a revenue of 129 crores in FY24 and breaking even in three years, with aspirations to meet or exceed industry growth rates.
• 🤝 FirstCry holds a 50.23% stake in Global Bees, with the remainder held by private equity players, indicating a potential risk of churn but also confidence in the business model.

Q & A

What is the brand 'First Cry' known for in India?

First Cry is a brand synonymous with child care, new mothers, and baby products in India, founded in 2010 by Supam Maheshwari.

How has First Cry performed in terms of profitability in recent years?

First Cry's India multi-channel business has been profitable for the last four years on an adjusted EBITDA basis, with an adjusted EBITDA of around 88.8% for FY24.

What is the size of the market that First Cry is addressing, and how fast is it growing?

First Cry is addressing a market that is expected to be worth $68 billion by CY28, growing at a rate of 20% per year.

Why is First Cry's gross margin lower than that of direct retailers?

First Cry's gross margins have been between 30 to 35%, which is lower than listed retailers' margins of 40%. The company has been working to improve its gross margins over the last 2 to 3 years.

What strategies is First Cry using to improve its gross margins?

First Cry is focusing on improving its assortment mix, curation, investment in brands, and home brand strategies to continue compounding its gross margins over a longer period.

What is the current state of First Cry's international business, particularly in UAE and Saudi Arabia?

First Cry started its international business in UAE in October 2019 and in Saudi Arabia in August 2022. The business is not yet profitable but is expected to turn around faster than it did in India.

How does the retail market in India compare to the GCC region in terms of organization?

India's retail market for child care is largely unorganized, with 86% of the market being unorganized, while the GCC region has a very organized retail market.

What is First Cry's plan for its international business in terms of growth and profitability?

First Cry plans to replicate its India playbook in the Middle East, focusing on the organized market and leveraging its strengths in supply chain, tech platform, and brand building.

What is the Global Bees business and why did First Cry decide to incorporate it?

Global Bees is a house of brands founded by First Cry, making investments in D2C companies across various categories. It was incorporated within First Cry to leverage the competencies built in the First Cry ecosystem, such as global supply chain, tech platforms, and brand building capabilities.

How has Global Bees performed in terms of revenue and profitability?

Global Bees achieved a revenue of 129 crores in FY24 and has already reached an adjusted EBIT break-even in three years.

What are the future growth prospects for Global Bees?

Global Bees aims to at least meet or beat the industry growth rates, which are projected at 34% for the next four to five years, and improve its adjusted EBIT margins from the current break-even point.