Brainbees Solutions, the parent company of Firstcry, plans to allocate more than INR 150 crore from the proposed IPO funds to enhance its operations in the Gulf region, focusing particularly on the Kingdom of Saudi Arabia.
The move aims to further solidify its leadership in KSA. Firstcry aims to raise approximately INR 4,000 crore through the IPO, which includes a fresh issue of INR 1,800 crore.
In the Draft Red Herring Prospectus submitted to SEBI, Firstcry has stated it plans to inaugurate 12 new stores between FY25-27, with an investment of INR 73 crore.
Continue Exploring: IPO-bound FirstCry files DRHP, targets INR 1,816 Crore fundraising in fresh issue
The company also plans to establish its own 2.5 lakh square feet warehouse by deploying INR 83 crore. This investment will facilitate the company in establishing its offline presence and distribution in KSA.
In India, Firstcry manages 936 retail outlets, backed by a network of 80 warehouses and stockists.
The expenditure on childcare products per child in KSA is INR 60,000, which is over seven times higher than that of India (INR 8,000). This is further compounded by a high birth rate of 17.5 per thousand population as of 2021, surpassing both India and China.
This positions KSA as the largest market for childcare products in the GCC, with an estimated value of INR 49,400 crore in 2022. The market is anticipated to witness a four percent Compound Annual Growth Rate (CAGR) until 2027, reaching a projected range of INR 59,000 to INR 63,000 crore.
The expansion is predominantly fueled by the increasing prevalence of e-commerce, elevated employment rates, and a growing emphasis on children’s health and safety.
While Firstcry contends in KSA with competitors like Amazon, Babyshop, owned by the Landmark Group, and other brands encounter challenges in the Middle East.
The UK-based childcare and parenting brand Mothercare, which obtained 43 percent of its revenues from the Middle East and 13 percent from KSA, experienced an 11 percent and 20 percent decrease in sales, respectively, attributed to ‘local factors,’ as stated in Mothercare PLC’s 2023 Annual Report.
Firstcry’s Successful Entry and Operations in KSA
Nevertheless, Firstcry ventured into KSA in August 2022, aiming to replicate its successful playbook from India. FirstCry Arabia provides a range of over 167,500 Stock Keeping Units (SKUs) from more than 3,100 brands spanning various categories.
Firstcry’s international Gross Merchandise Value (GMV) has experienced remarkable growth, expanding 2.3 times from FY21 (GMV INR 377 crore) to FY23 (GMV INR 874 crore). This substantial increase signifies a notable 52 percent Compound Annual Growth Rate (CAGR).
The average order value has shown a consistent rise, climbing from INR 5,311 in FY21 to INR 7,644 in Q1FY24.
However, this is partially due to the recent start and the influence of a small base effect.