🎈 Up Big Today: Find today's biggest gainers with our free screenerTry Stock Screener

BofA bullish on FirstCry with $770 target on strong growth outlook

EditorLina Guerrero
Published 09/19/2024, 02:46 PM
© Reuters.
BAC
-

On Thursday, BofA Securities began coverage of BrainBees Solutions Ltd (: FIRSTCRY:IN), commonly known as FirstCry, with a Buy rating and a price target of $770. The firm's analysis suggests FirstCry is well-positioned in the Indian mother and baby care (MBK) market, which is less competitive, to achieve a 21% compound annual growth rate (CAGR) in revenue.

BofA Securities highlights the company's omni-channel strategy, which spans both online and offline sales, as a key factor in reducing customer acquisition costs and increasing average order value (AOV) and order frequency, contributing to consistent growth.

The firm also anticipates FirstCry to experience a 500 basis points margin improvement over the next three years, leading to an adjusted EBITDA CAGR of 57% from fiscal years 2024 to 2027. This forecasted improvement in margins is expected to be driven by a better mix of high-margin private labels, an increasing number of company-owned and company-operated stores, scale economies, and the company's ability to negotiate with third-party brands.

According to BofA Securities, FirstCry is projected to reach net income positivity by the fiscal year 2026 and become free cash flow positive by the middle of the same fiscal year.

The firm believes that like its Indian peers, FirstCry will be able to command a premium valuation compared to global averages due to its stronger EBITDA growth prospects, lower competitive pressures, and the absence of specific regulatory challenges. Currently, FirstCry is trading at 31 times its projected FY27 enterprise value to adjusted EBITDA.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.