Stock Market Today : FirstCry made a strong debut in the stock market on Tuesday, with its shares listing at a premium of around 40%, surpassing market expectations. The shares of FirstCry, traded under its parent company Brainbees Solutions Limited, opened at ₹625 on the BSE and ₹651 on the NSE. Shortly after listing, the stock continued to climb, reaching an intraday high of ₹707.70 per share on the NSE and ₹707.05 on the BSE. However, the stock couldn’t maintain these highs, pulling back after early profit-taking.
Stock market experts noted that FirstCry’s performance on its first trading day was impressive, but they also expressed caution. They highlighted that the stock is currently trading well above its estimated fair value, which ranges from ₹550 to ₹575 per share. Due to this, experts are advising those who received shares during the allotment to consider booking profits and exiting their positions.
One of the key concerns is the financial health of FirstCry’s parent company, Brainbees Solutions Limited. Despite the company’s strong market presence and integration of physical and online platforms, it faces significant challenges. In FY24, FirstCry reported a 15% increase in revenue to ₹6,575.1 crores, but it also posted losses of ₹321.5 crores and saw its debt rise from ₹176.5 crores to ₹462.7 crores. These ongoing financial issues, including persistent negative cash flows and rising debt, have raised concerns among analysts.
Akriti Mehrotra, a Research Analyst at StoxBox, noted that while FirstCry has benefited from its strong network effects and operational efficiency, its financial challenges cannot be overlooked. The funds raised from the IPO are primarily intended for operational purposes rather than reducing debt, which further exacerbates concerns about the company’s financial stability. Mehrotra recommended that investors who received shares during the allotment process should book profits now, given the short-term enthusiasm in the market, but remain cautious due to the company’s underlying financial difficulties.
Arun Kejriwal, Founder of Kejriwal Research and Investment Services, echoed similar sentiments. He pointed out that FirstCry’s share price exceeded market expectations, with shares trading around ₹670 on the NSE, significantly above the anticipated listing range of ₹550 to ₹575. Kejriwal anticipates a sharp sell-off in the stock as investors look to lock in profits. He advises medium and long-term investors to wait for the stock to return to its fair value before considering new positions.
Disclaimer: The opinions and recommendations expressed are those of individual analysts or brokerage firms and do not necessarily reflect the views of SML. Investors are encouraged to consult certified financial experts before making any investment decisions.
Frequently Asked Questions (FAQs)
What is an IPO, and how does it work?
An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time. Investors can purchase shares during the IPO, and once the company is listed on the stock exchange, its shares can be traded openly.
How do I decide whether to invest in an IPO?
To decide on investing in an IPO, research the company’s financial health, business model, growth potential, and risks. Consider the IPO’s pricing, market conditions, and expert opinions before making a decision.
What happens to the stock price after an IPO?
After an IPO, the stock price can fluctuate based on market demand, company performance, investor sentiment, and broader economic conditions. It may rise sharply, remain stable, or even decline.
What are the risks of investing in newly listed stocks?
Investing in newly listed stocks carries risks such as price volatility, lack of historical trading data, and uncertainty about the company’s future performance. The stock price may also drop if market expectations aren’t met.
Should I hold or sell my IPO shares immediately after listing?
The decision to hold or sell IPO shares depends on your investment goals and market conditions. If the stock price rises significantly, some investors may choose to sell and lock in profits, while others may hold for potential long-term gains. Consulting with a financial advisor can help in making this decision.