Shares of Brainbees Solutions, the company behind FirstCry, dropped by 2.3% on Monday, ending at Rs 457.10 on the BSE. This decline is mostly because investors are worried about a big upcoming event—nearly 60% of the company’s shares (over 300 million) will be available for trading after February 13. This is a huge number compared to the usual daily trading volume of about 760,000 shares, leading to fears that many people will sell their shares.
Over the past three months, Brainbees shares have fallen by 26%, which is worse than the overall market trend. Recently, the stock has slipped 6.5% just in the last week. Despite these worries, JM Financial, a brokerage firm, still believes that Brainbees is a good investment for the future. They have kept their “buy” rating but reduced their target price to Rs 667, which still offers a possible gain of 46% from the current price.
JM Financial thinks that many of the investors who bought in before the IPO have already made good profits and that any selling will likely be more about managing portfolios rather than issues with the company itself. They also pointed out that Brainbees shares are currently trading at a 24% lower price compared to similar companies like Nykaa, making it an appealing option for long-term investors.
The firm mentioned that FirstCry might grow at a slower pace because it loses old customers every 4-6 years and faces challenges with birth rates. However, they believe the current discount on shares is too high and that Brainbees is priced attractively, suggesting the stock could rise after the lock-in expiry.
Looking ahead, JM Financial expects Brainbees to have moderate growth in Q3FY25, estimating that its sales will grow by 18.8% compared to last year. This growth will largely come from strong expansion efforts abroad, especially in Saudi Arabia. However, the currently high spending on international investments may affect the company’s profits in the short term.
In summary, while there are some challenges ahead, JM Financial remains confident in Brainbees’ future potential, noting that the company has solid value and a strong position in the market, along with good prospects for growth after the lock-in expiry.
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