Firstcry (Brainbees Solutions) , the popular e-commerce platform for baby and kids products, has further solidified its position in the roll-up e-commerce space by increasing its stake in Globalbees. The company has invested ₹73 crore in the second tranche of Globalbees' Compulsorily Convertible Preference Shares (CCPS), boosting its ownership to 51.51% and securing majority control.

Investment Details

Firstcry (Brainbees Solutions), officially known as Brainbees Solutions Limited, made this strategic move as part of a larger investment plan in Globalbees. According to the company's disclosure to the stock exchanges:

• The investment amounts to ₹73,00,47,000 (Seventy-Three Crores and Forty-Seven Thousand Rupees).
• It was made towards the 2nd Tranche Series C2 CCPS of Globalbees.
• Globalbees allotted 2,220 Series C2 CCPS to Firstcry (Brainbees Solutions).
• Each CCPS has a face value of ₹5 and was issued at a premium of ₹3,28,845.

Stake Increase and Control

This investment marks a significant milestone for Firstcry (Brainbees Solutions):

• The company's shareholding in Globalbees has increased from 51.12% to 51.51% on a fully diluted basis.
• Firstcry (Brainbees Solutions) now holds 89,279 shares in Globalbees.
• This majority stake gives the company greater control over Globalbees' operations and strategic direction.

Broader Investment Context

The recent investment is part of a larger funding initiative:

• Firstcry (Brainbees Solutions)'s board had previously approved an investment of up to ₹146,00,94,000 in Globalbees.
• This investment was planned to be made in one or more tranches.
• The current ₹73 crore investment represents the second tranche of this approved amount.

Globalbees' Funding Round

As part of this funding round, Globalbees, which is a material subsidiary of Firstcry (Brainbees Solutions), has also raised capital from other existing shareholders:

• This allotment was made to existing shareholders who were party to the Series C2 Share Subscription Agreement.

Firstcry (Brainbees Solutions)'s increased investment in Globalbees underscores its commitment to expanding its presence in the e-commerce ecosystem. By gaining majority control, the company is well-positioned to leverage Globalbees' platform and potentially accelerate its growth in the competitive online retail space.

The move also highlights the growing trend of established e-commerce players investing in and acquiring stakes in promising startups and platforms to diversify their portfolio and strengthen their market position.

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.