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Indian equities have seen a tough start to 2025, suggesting the need for portfolio allocation towards low-beta stocks with strong valuation comfort. FirstCry, coincidentally, also saw its pre-IPO lock-in expire during this period resulting in potential buyers holding off while potential sellers liquidated position before the event. With over a week since lock-in expired on Feb 10th, 2025, we note that neither have the volumes spiked nor have we seen any block deals, denoting pre-IPO investors’ willingness to hold on to their positions until better value is on offer. Our calculations suggest that CMP is implying c.24x FY27E Pre-Ind AS Adj. EBITDA for India multi-channel segment, considerably cheaper to other consumption related internet companies as well as lower growth, traditional retailers. We reiterate BUY with Mar’26 TP of INR 605 (54%+ upside), factoring lower multiple for International business segment

* Pre-IPO investors likely to await better valuation: As highlighted in our earlier note on FirstCry’s lock-in expiry, roughly 60% of the company’s share capital became available to trade on Feb 10th, 2025. However, we do not see volumes rising or any block deals since the expiry, clearly demonstrating that existing investors see substantial value and are unlikely to sell until valuations improve significantly. Furthermore, major pre-IPO investors such as SoftBank and M&M (c. 30% of shareholding) do not have any compulsion to sell with SoftBank having held until valuations improved in case of other internet companies.

* Core India Multi-channel business remains deeply moated: FirstCry’s India Multi-channel business reported 17% 9MFY25 YoY revenue growth while also delivering 70bps rise in Adj. EBITDA margin, delivering 27% compounding. We expect the segment to sustain 17% FY25-29E GMV CAGR along with sustained margin rise as the company remains the “go-to” childcare platform in India. While FirstCry accounts for c.25% market share in online childcare, share jumps to 35%+ in 0-4 year age group, demonstrating the robust brand recall. Furthermore, the company also owns the largest childcare brand (BabyHug) in the country, which retails only on its own website and offline stores. This ensurers significant stickiness with the customers who have strong brand affinity for BabyHug.

* GlobalBees and Others have delivered operating profitability while International segment is still in investment phase: As of Q3FY25, GlobalBees / Others delivered 1.4% / 22.7% Adj. EBITDA margin that is expected to rise further. Our checks suggest that GlobalBees brands perform well across marketplaces with rising play on the major quick commerce platforms. With operating profitability in place and the company owning 50.73% stake, we believe the segment can fetch significant value if / when the management decides to spin-off. On the other hand, International segment has seen recent rise in competitive intensity and is likely to require sustained investment until breakeven in FY28.

* India multi-channel available at highly reasonable valuation: At CMP, our calculations suggest that the street is valuing India multi-channel business at c.24x FY27E Pre-Ind AS 116 Adj. EBITDA. When compared with other consumption-related internet names, this is the cheapest stock with Nykaa core BPC multiple coming closest at 36.1x. Furthermore, this valuation is also significantly cheaper than low-growth, traditional retailers with limited margin expansion potential. Reiterate BUY with Mar’26 TP of INR 605.

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