FirstCry's Supam Maheshwari Confident in Post-IPO Success: 'We'll Deliver on Growth for Our Investors'

FirstCry’s IPO has opened for subscription today. The price band of the IPO is Rs 440-465 a share, and it will close on August 8. The public offering includes a fresh issue valued at Rs 1,666 crore and an offer for sale (OFS) of up to 5.44 crore shares. 

The aim of the company is to raise Rs 4,193.73 crore through its IPO launch. Ahead of its public offering, the company already raised Rs 885.8 crores from 71 anchor investors at the upper price band of Rs 465 per equity share. 

Supam Maheshwari, the co-founder and CEO of FirstCry, talked with Outlook Business about his expectations from the upcoming IPO, the specific strategies that the company is implementing to sustain the profit margin, how the company can address the expectations of primary investors post-IPO and more. 

What are your expectations from the FirstCry IPO, and how do you plan to utilise the funds raised? 

My expectations for the FirstCry IPO are high, marking a major milestone in our 13- to 14-year journey. Starting in 2010, we've grown into the largest shopping destination for mothers, babies, and kids in India, the UAE and USA. 

We've achieved key milestones, including creating Babyhug, India's largest multi-category brand for this segment by GMV, with the biggest product assortment in Asia Pacific, excluding China. These accomplishments over the last 13 years bring great satisfaction to me and my team. 

The IPO allows us to share our achievements globally and gain recognition from public market investors. It certifies our contributions to millions of parents, enhancing their parenting journey. This milestone will help us reach even more parents, making our customers proud and attracting potential new ones. The world will finally know our story. 

Having run this company since 2010, we are excited that the IPO will bring joy to our team and recognition for our efforts. We are grateful to our customers, especially the mothers, who have supported us along the way. 

The funds raised, totaling Rs 1,616 crores from the primary proceeds, will be utilised for several purposes. We will build Babyhug and FirstCry stores in India, with plans for approximately 350 stores. Additionally, part of the funds will be used to establish around 12 stores and warehouses in the Middle East, specifically in Saudi Arabia.

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We will invest about Rs 169 crores into our subsidiary, Globalbees, to increase ownership in step-down subsidiaries. The remaining funds will be allocated to marketing, technology and other areas. Furthermore, 35 per cent of the raised funds will be used for general corporate purposes and unidentified acquisitions. 

What specific strategies are you implementing to sustain your profit margins? 

Our business has four main segments: 

India Multi-Channel: Our core business for the past 13 to 14 years, including online platforms and 1,160 offline stores. We also distribute to pharmacies and grocery stores. This segment's adjusted EBITDA grew from 5.9 per cent in FY22 to 8.8 per cent in FY24.

International Operations: Covering the UAE and KSA (Kingdom of Saudi Arabia).

GlobalBees: A house of brands with improved profitability, from -5 per cent in FY22 to +0.2 per cent in FY24.

Other Ventures: focused on preschool and asset-light models with franchisees or partners.

Our India multi-channel segment is the largest, offering 1.65 million curated products across 7,500 brands and personalised app experiences, boosting customer engagement and marketing efficiency. 

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We plan to expand by adding more stores in India and the Middle East, driving growth and operating leverage. We also run India's largest parenting channel on YouTube, connecting emotionally with mothers through comprehensive support and resources. 

Our goal is to maintain and improve our leadership position, strengthen customer relationships, enhance margins and demonstrate consistent financial performance. 

You have been focusing a lot on offline expansion both in India and Saudi Arabia. On that note, will offline expansion be your current focus? 

Our online and offline mix hasn't changed much in the last two years. During FY21 and part of FY22, the online share was slightly higher due to Covid, but it remained consistent in FY23 and FY24. 

Our India multi-channel segment, which is roughly 75 per cent online and 25 per cent offline, will continue to grow. The number of millennial mothers joining our journey from FY24 onwards is increasing, as they are digitally savvy. India's digitally evolved environment supports our e-commerce growth while providing the convenience of offline stores near their homes. 

Customers often transition between offline and online shopping and vice versa. Our business thrives on this multi-channel approach rather than being dominated by either online or offline alone. 

How do you plan to address the expectations of your primary investors post-IPO? 

Expectations of primary investors post-IPO focus on our execution-oriented team. We have consistently demonstrated strong relationships with our customers, particularly mothers and fathers, which is ingrained in our philosophy. Our aim is to continue reinforcing this trust, which we believe will result in superior financial performance in terms of both top line and bottom line. 

Our mission is to provide joy to young parents in their parenting journey, addressing the sudden challenges that come with having a young child. As a one-stop solution, we help make this journey easier and more joyful. By continuing to focus on our customers, we believe we can deliver superior performance, leading to superior returns for our investors over time. We remain dedicated to our core principles and trust that our efforts will be rewarded. 

In the past, we have seen many new-age IPOs witnessing oversubscriptions and massive listing gains, but they fail to maintain the winning momentum. Even some of the companies listed in the last 3-4 years are trading below their listing prices. How do you plan to be persistent with that? 

I believe part of the challenge stems from the different market conditions we faced. While I can't comment on the specifics of past events, our approach to defining the price band was very structured. Our board appointed banking partners who facilitated meetings with over 100 investors, both foreign and domestic, including large public market investors in India and abroad. 

The banks gathered feedback from these meetings to recommend a price band, which was included in the RHP [red herring prospectus] after board approval. We feel confident that this process was thorough and well executed. We aim to continue delivering strong operating performance. While I can't predict market conditions or pricing, we believe our focus on operational value will yield positive results. The market environment today is very different from 2021, which is the key difference. 

The SEBI had returned your draft IPO papers for more clarification. The SEBI has returned draft IPO papers of many companies. On that note, do you think the market regulator is going tough on new-age IPOs? 

I cannot comment on SEBI as it is a government institution responsible for market investors. After receiving feedback from our banking partners and advisors, we quickly refiled our DRHP within 15 to 18 days, including the additional information requested. We promptly received regulatory approval, and the process is progressing. 

This is part of our journey, and we are learning with the help of our partners and counsel. While I cannot speak for SEBI, I can confirm that we complied with all requirements and swiftly refiled. As a professionally managed company with high corporate governance standards, we promptly submit any requested information to facilitate our IPO process.