We Currently Have 1,063 Stores, Will Add 350 More Stores Over Next Few Years: FirstCry | CNBC TV18

Summary

In this interview, Su Maheshwari, MD, and CEO of BrainBees Solutions, the parent company of FirstCry, discusses the company's IPO and growth outlook. With the organized baby care market growing at 20% annually, Maheshwari highlights FirstCry's multi-channel business model, strong online and offline presence, and unique community-driven app features that differentiate it from competitors. The company aims to expand its offline stores and improve profitability, capitalizing on India's digital-savvy millennial mothers.

Takeaways

• 📈 First Cry is going public with an IPO that opens for subscription today, aiming to raise up to 2,500 crores through the offer for sale of up to 54.3 million equity shares.
• 💼 Super Maheshwari, the MD and CEO of BrainBees Solutions, the parent company of First Cry, discusses the company's IPO and growth outlook in the interview.
• 👶 The overall market for childcare in India is approximately $34 billion and is expected to grow to $66 billion by 2029, with only 16% of it being organized currently.
• 📊 The organized segment of the market is growing at a rate of 20%, faster than the overall industry growth rate of 13-14%.
• 🛒 First Cry operates a multi-channel business model, with 75% of its GMV coming from online sales and 25% from its 1,063 stores across 533 cities in India.
• 🌐 First Cry has a strong online presence, but also values the offline market, planning to add 350 more stores in the next two years with the proceeds from the IPO.
• 👩‍👧‍👦 The company focuses on young mothers and fathers, building competencies over 13-14 years to cater specifically to their needs.
• 🤰 First Cry has a large parenting community within its app, providing support and resources for mothers throughout pregnancy and post-pregnancy.
• 🔍 The app offers personalized experiences, with different homepages for mothers of children of varying ages, ensuring a tailored shopping experience.
• 📊 First Cry's core business has shown an increase in adjusted EBITDA margins, rising from 5.9% in FY22 to 8.8% in FY24, indicating a path towards profitability.
• 🚀 The company aims for steady expansion and profitability, with a roadmap that includes improving margins and growing both online and offline segments.

Q & A

What is the size of the overall industry mentioned in the script?

The overall industry size is close to $34 billion as of today and is expected to become $66 billion by FY 2029.

What percentage of the industry is currently organized?

Currently, 16% of the market is organized, while 84% is unorganized.

What is the expected growth rate of the organized industry?

The organized industry is growing at a rate of 20% CAGR.

What is the total addressable market (TAM) for Brainbees Solutions by FY 2029?

The total addressable market for Brainbees Solutions is around $120 billion by FY 2029.

How does FirstCry differentiate itself from other apps and platforms?

FirstCry differentiates itself by being a specialist in child care, offering a multi-channel business model, running the largest parenting channel on YouTube, and providing a parenting community within its app with various tools and personalized experiences.

What is the mix of GMV for FirstCry between online and offline segments?

75% of FirstCry's GMV comes from online channels, while 25% comes from offline stores.

How many stores does FirstCry currently have, and how many more are planned?

FirstCry currently has 1,063 stores and plans to add 350 more stores in the next two years.

What are the advantages of FirstCry's multi-channel retail model?

The multi-channel retail model allows mothers to shop both online and offline, providing convenience, variety, and a trusted retail platform with significant presence in both areas.

What are some unique features of FirstCry's app for parents?

FirstCry's app includes features like a parenting community, evolution tracker, growth tracker, vaccination tracker, baby names, and parenting GPT, all integrated within the shopping app.

What is the current EBITDA margin for FirstCry, and what is the expected trend?

The current EBITDA margin is about 4%, with the core business segment already at 8.8%. The company expects steady expansion in EBITDA margins as the business grows.

Outlines

00:00

🛒 First Cry's IPO and Market Overview

The video script discusses the upcoming IPO of First Cry, an e-commerce platform focused on childcare products, with an offer for sale of up to 54.3 million Equity shares. Super Maheshwari, the MD and CEO of BrainBees Solutions, the parent company of First Cry, is interviewed to provide insights into the IPO offering and the growth outlook. The conversation highlights the size of the overall market, which is approximately $34 billion and expected to grow to $66 billion by 2029. Currently, only 16% of the market is organized, with the organized segment growing at a rate of 20% annually. First Cry operates in four segments with a total addressable market of around $120 billion by 2029. The discussion emphasizes the importance of the organized sector and the potential for growth in the childcare market in India.

05:01

📈 First Cry's Business Model and Expansion Strategy

This paragraph delves into First Cry's business model, emphasizing its multi-channel approach, which includes both online and offline sales. The company has a significant presence in both sectors, with 75% of its GMV coming from online sales and the remaining 25% from its 1,063 stores across 533 cities in India. The strategy involves expanding the offline segment by adding 350 more stores in the next two years, leveraging the preference of Indian consumers for both online and offline shopping. The discussion also touches on the company's margins, which are currently at 4%, and the roadmap for steady expansion and profitability. The company's core business has demonstrated an increase in adjusted EBITDA, reaching 8.8% in the most recent financial year, indicating a positive trajectory for future growth and profitability.

Keywords

💡IPO

An Initial Public Offering (IPO) is the first sale of stock by a company to the public. In the context of the video, First Cry's IPO is a significant event marking the company's entry into the stock market, allowing it to raise capital by offering shares for sale to the public. The script mentions the IPO opening for subscription, indicating the company's move towards becoming publicly traded.

💡Equity Shares

Equity shares represent ownership stakes in a company. In the video script, the offer for sale of up to 54.3 million equity shares signifies the portion of the company that will be sold to investors during the IPO process. This is a key component of First Cry's fundraising strategy.

💡MD and CEO

MD stands for Managing Director, and CEO stands for Chief Executive Officer. These are top executive positions in a company, responsible for its overall management and strategic direction. Su, the MD and CEO of BrainBees Solutions, is mentioned in the script as a key figure in First Cry's journey towards the IPO.

💡Organized vs. Unorganized Market

The terms 'organized' and 'unorganized' market refer to the level of structure and regulation within a sector. An organized market is formal, regulated, and typically has established companies with standardized practices, while an unorganized market is more fragmented and less formal. The script discusses the shift from an unorganized to an organized sector in the childcare industry, highlighting the potential for growth and consolidation.

💡GMV

Gross Merchandise Volume (GMV) is the total dollar volume of sales transacted through a marketplace over a certain period of time. In the script, GMV is used to illustrate the scale of First Cry's business, with 75% of it coming from online sales, indicating the company's strong online presence and consumer engagement.

💡Multi-Channel Business Model

A multi-channel business model involves using multiple platforms or channels to reach customers, such as online websites, mobile apps, and physical stores. The script mentions First Cry's multi-channel approach, which includes both online sales and a significant offline presence through stores across the country, catering to the preferences of mothers who buy both online and offline.

💡Parenting Channel on YouTube

A parenting channel on YouTube is a platform that provides content related to child-rearing, often including advice, tutorials, and community discussions. In the script, First Cry's parenting channel is highlighted as the largest of its kind, offering valuable content and community support to young parents, which is a unique aspect of the company's engagement strategy.

💡Curation and Personalization

Curation refers to the process of selecting and organizing content to meet specific needs or interests, while personalization tailors this content to individual preferences. The script emphasizes First Cry's focus on curation and personalization, providing different homepages and experiences for mothers based on the age of their children, enhancing user experience and engagement.

💡Growth Outlook

Growth outlook refers to the projected future expansion or development of a business or industry. The script discusses the growth outlook for First Cry and the childcare industry in India, with expectations of a significant increase in market size and the shift from an unorganized to an organized sector.

💡Profitability

Profitability is the ability of a business to generate profit, indicating its financial health and efficiency. The script touches on First Cry's margins and the roadmap for achieving profitability, with a focus on improving performance across its business segments and the potential for steady expansion.

💡Digital Savvy

Being 'digital savvy' means being knowledgeable and skilled in using digital technology and the internet. The script mentions that millennial mothers in India are increasingly digital savvy, which influences their shopping preferences and behavior, favoring online platforms like First Cry for their convenience and variety.

Highlights

First Cry's IPO opens for subscription with an offer for sale of up to 54.3 million Equity shares.

The company's focus on the primary market and its growth outlook is discussed with the MD and CEO of BrainBees Solutions.

The overall industry is large, estimated at around $34 billion with a projection to become a $66 billion market by 2029.

Only 16% of the market is organized, with the rest being unorganized, presenting a significant opportunity for growth.

The organized sector of the industry is growing at a rate of 20%, faster than the overall industry growth of 13-14%.

First Cry operates in four segments with a total addressable market of around $120 billion by 2029.

The company differentiates itself as a specialist and vertical retail player focusing on young mothers and fathers.

First Cry has a multi-channel business model with both online and offline presence across 533 cities in India.

The company runs the largest parenting channel on YouTube and has a strong community within its app.

First Cry provides a range of services within its app, including pregnancy and post-pregnancy support, and a parenting community.

The company's app offers personalization and curation, providing different homepages for mothers of different aged children.

First Cry's GMV mix is predominantly online, but the company is also expanding its offline segment by adding more stores.

The strategy includes increasing the number of stores to 1063, with plans for 350 more in the next two years.

The company's online business is expected to continue growing due to variety, convenience, and digital savviness of millennial mothers.

First Cry's core business has demonstrated an increase in adjusted EBITDA margins, reaching 8.8% in the current financial year.

The company aims to achieve double-digit EBITDA margins and become profitable at a net level as its business segments mature.

Viewers are encouraged to watch a detailed interview with the management for more insights on the company's IPO and business strategy.

Transcripts

let's focus on some primary Market

action now well um first cries 4,200 CR

IPO opens today for subscription the

issue comprises of an offer for sale of

up to 54.3 million Equity shares or

2,500 crores to discuss this in detail

on the IPO offering and the growth

Outlook we have super maheswari the MD

and CEO of brain be solution uh you know

that is a parent company of first cry

that joins in here in the studio Su

thanks a lot for joining in and you know

at the onset I must say that being a

mother I think first cry was an app that

I have used endlessly there was a point

in time when I was only using you know

first cry for my baby but um uh

congratulations on you know your um sort

of move towards Dalal Street and the

impending listing but just wanted to

start by asking you about the industry

itself right What proportion of the

industry is unorganized currently how

much do you expect the shift will be to

organ to the organized sector sure first

of all thanks uh for having me here and

uh good to see that you were our

customer as well uh uh so and and you

trusted us um so to answer your question

Sonia I think look uh the overall

industry is very very big which is

around close to $34 billion as of today

it's going to become 66 billion dollar

by close to fi 29 and within that only

16% of the market today is organized

that's 84% of the market is unorganized

the overall industry is growing at a 13

14% ker where the organized industry

which is 16% is growing at 20% K so this

is like a very very sort of a massive

time as far as I'm talking about India

child care for brain bees overall I

think we are uh our overall Tam total

addressable Market will be around $120

billion so that's even bigger because we

operate in four segments uh if you put

together all of the total address Market

is around $120 billion by f529 so you

know just I mean as a consumer right

I've realized that of course there are

apps and platforms like first cry which

is concentrated on child care and then

there are a whole other set of apps as

well where you get everything including

child care so how do you um

differentiate how do you combat this

kind of competition so look no it's a

great question um so fundamentally um

you have to look at uh we are a

specialist uh and a vertical uh retail

player which we have is we have built a

over last 13 to 14 years certain set of

Competency uh to only focus on young

mothers and fathers uh as our DNA and uh

all the solutions that we have built so

let's say for example I'll enumerate few

of them the first of all is that we are

a true multi-channel uh business model

which essentially means Although our

large part of our gmv 75% of it comes

from our online in India multi Channel

retail and 24 25% comes from our

1,63 uh uh uh you know uh shops that we

have across 533 cities in the country so

in this particular category mothers

prefer to buy both online and offline

and that gives us a very unique power

that we have a one trusted retail

platform which has both significant

online and significant offline presence

across uh 1,63 that's number one number

two we have a very we' run the largest

parenting Channel on YouTube and we have

a parenting community uh you know uh

within our app and this app allows a

mother when she conceives a baby uh she

goes through pregnancy post pregnancy

all the time till the time that kids

become a certain age she's very anxious

she's very inquisitive during that phase

of that physiological chain that goes on

with her she wants validation of oral

queries and answers and we have provided

all of that through help of gynecologist

pediatricians uh other fellow Ms who

have been through the Journey who are

answering those questions like a Kora

platform on this is all happening within

our app and provide things like you know

you uh Evolution tracker to grow tracker

vaccination tracker baby names parenting

GPT all kind of stuff is embedded within

the community and this community resides

had all this back here it was not five

six years seven years ago that's correct

all of it is now live kicking running

into the app and this is Within part of

the shopping app so some of these things

are not going to be provided by anybody

because we are true to that moment uh in

the parenting Journeys so this is like

the second and and we have built a whole

lot of curation

personalization like on our app you will

see a mother of a four-month-old or a

4-year-old or 8-year old will see a very

different homepage okay that is very

unique very different than what you will

see in a different typical you know app

or any other Marketplace all right

talking about uh parents of four and

five well I have a three-year-old and a

5-year-old so I think you know that I

would be a customer I've seen the bills

around the house but let's focus a

little bit on business because you know

a lot of viewers would want to

understand I'm looking at your gmv you

know if I look at the mix most of it is

offline right is online right now yes

but you're looking at you know even

upping the offline segment because

you're adding stores tell us what is the

strategy out there my understanding

would be when you set up stores it

requires a lot of more working capital

and things would be very very different

so what is the strategy with regard to

this mix of gmbb online versus offline

sure so look um when we started our you

know business back then in 2010 and uh

we we always had believed that we will

also solve all the solutions that we are

building we will solve for offline as

well because India you know back then in

2010 we believe 10 years 20 years later

it'll be still a offline market and we

are here after 14 years it's still an

offline Market e-commerce penetration

still in single digits correct uh having

said this uh we have built 1063 stores

uh and in in that if you look at it we

are putting 350 more stores uh on the

use of proceeds in the next 2 years yes

uh our online will continue to grow of a

very simple reason because of the

variety and because of the convenience

that it offers and the curation and

personalization that it offers okay and

more importantly the millennial mothers

that are out there are far more

digitally savy than what we had 3 years

back 5 years back 10 years back and that

will continue to compound because more

and India is one of the most digital

savviest country in the world and

therefore Millennial mothers will come

to us first online and they will also uh

you know you know transact offline in

the vicinity of their home that's what

will continue to happen and therefore

being the largest organized player in

the Market within you know a large time

and and and although we are still very

small as a company only 6,480 crores but

we will still continue to have a

Headroom without really not too much of

both offline and online will continue to

grow got you know we I think you did a

detailed interview with Rema uh earlier

and I'd encourage our viewers are

thinking of applying into the IPO to

sort of go watch that entire interview

but because for the POS of time I want

to get a few things uh out of the way

you're a bit of margins are at about 4%

only MH uh what what what is the road

map I mean are we looking at steady

expansion sure absolutely uh look uh how

it will actually happen if you look at

our past track record for we have four

business segments you're talking about

4.2% fi 24 adjusted ABA that's at a

console level in this there are two new

businesses which are less than three

year old uh and these are typically all

so four goes to what I'm sorry I'm

pressing you

but just take a minute uh if you look at

our India multi Channel alone uh we were

at 5.9% for f522 6.2 in fi23 and in uh

f524 we already become 8.8 so our Core

Business which is the largest piece of

our business has been in the making for

13 to 14 years is already delivered 8.8%

disted AA so this will continue to

expand as what we have demonstrated in

the past because all the things and all

the strengths and modes that we have

built you have to get a double digit

look others have done it we should be

able to do it there's no doubt and

question in our mind and when do you get

when do you take profitable when do you

become profitable at a net level uh it's

it's uh as we you know as all our four

business segments continue to deliver uh

better results over a period of time

because they're relatively new some of

them are relatively new uh all of this

will translate into uh a sort of a

pattern a pbd performance absolutely uh

thanks very much apologies sort of for

pressing you POS time thank you very

much and good luck uh with the IPO and

once again to all our viewers who

thinking of sort of wanting to know more

about the company I encourage you to go

online to the website the CNBC website

and watch that detail interview uh with

suum and the first crime management well