Shares of Firstcry (Brainbees Solutions) , the parent company of FirstCry, experienced a significant surge of 14% in intraday trading, reaching a high of Rs 403.00. This impressive rally comes on the heels of the Indian government's announcement of GST relief on several key product categories that form the core of FirstCry's business.

GST Rate Cuts: A Boon for FirstCry

The GST Council has implemented substantial rate reductions across various product categories that are central to FirstCry's offerings:

• Personal baby care and beauty products: GST rate reduced from 18% to 5%
• Baby napkins and diapers: GST rate cut from 12% to 5%
• Toys: GST rate lowered from 12% to 5%
• Stationery items (e.g., pencils and geometry boxes): GST completely eliminated

These reductions are expected to have a positive impact on FirstCry's business, as the company specializes in infant, maternity, and children's products.

Recent Financial Performance

While the GST cuts have boosted investor sentiment, it's worth noting FirstCry's recent financial performance:

Despite the increase in revenue, the company faced challenges with profitability, as evidenced by the decline in EBITDA and margin compression.

Stock Performance

The recent surge in Brainbees Solutions' stock price marks a significant turnaround for the company. Prior to this rally, the stock had delivered negative returns of 40% since its listing, highlighting the volatility and challenges faced by the company in the public markets.

The GST rate cuts on key product categories are viewed as a potential catalyst for improved performance in the coming quarters. Investors will be closely watching how these tax benefits translate into FirstCry's financial results and whether they can help reverse the trend of declining profitability.

As the e-commerce landscape for baby and children's products continues to evolve, FirstCry's ability to capitalize on these favorable tax changes while addressing its operational challenges will be crucial in determining its future trajectory in the market.

Firstcry (Brainbees Solutions) , the parent company of FirstCry, has reported a strong performance in the first quarter, with significant growth in adjusted EBITDA and a milestone achievement in free cash flow.

Financial Highlights

• Revenue grew by 13% year-over-year to INR 18,626.00 million
• Adjusted EBITDA increased by 25% to INR 931.30 million
• Achieved positive free cash flow at the consolidated level for the first time
• Gross margin expanded by 82 basis points

Segment Performance

India Multi-Channel Business

• Revenue grew by 8% to INR 12,366.00 million
• Adjusted EBITDA increased by 12% to INR 1,067.00 million
• Gross margin improved from 36.6% to 37.8%

International Business

• Revenue grew by 13% to INR 2,070.00 million
• Adjusted EBITDA improved by 30% year-on-year
• Gross margin expanded by 100 basis points

Globalbees

• Revenue grew by 31% to INR 4,265.00 million
• Core categories showed strong 40% revenue growth

Key Performance Indicators

• Annual unique transacting customers reached 10.8 million, growing 14% year-over-year
• GMV for the consolidated business grew by 9%

Operational Updates

FirstCry faced challenges in the first quarter, including a consumer slowdown, changes in the last-mile delivery ecosystem, and geopolitical tensions in North India. Despite these hurdles, the company saw encouraging signs of growth in July, with early teens revenue growth compared to the previous year.

Supam Maheshwari, Managing Director and CEO of Brainbees Solutions Limited, commented on the results: "We are very happy to report 25% growth in our adjusted EBITDA for the consolidated business for the first quarter, vis-a-vis, the Q1 of the previous fiscal year. Also at a consolidated level, for the first time we have become Free Cash Flow positive."

The company is focusing on improving customer experience, particularly in last-mile delivery. FirstCry has expanded its delivery experience improvement experiment to four cities and plans to extend it further in the coming months.

In the international segment, FirstCry is set to open its first store in Riyadh, Saudi Arabia, before the end of the current quarter, marking a significant step in its omni-channel strategy.

The company plans to open 90-100 stores in the current fiscal year, similar to the number opened in the previous year, as it continues to optimize its offline presence while maintaining capital efficiency.

Looking ahead, FirstCry management expressed confidence in maintaining early teens revenue growth for the India multi-channel business for the rest of the fiscal year, based on the positive trends observed in July.

Conclusion

FirstCry's first quarter results demonstrate the company's resilience in the face of market challenges and its ability to drive growth across its diverse business segments. The achievement of positive free cash flow at the consolidated level marks a significant milestone in the company's financial journey, while continued expansion in international markets and focus on improving customer experience position FirstCry for sustained growth in the coming quarters.