FirstCry shares fall 3% despite Q4 net loss narrowing to Rs 30 crore. What is Morgan Stanley saying?

Synopsis

FirstCry-parent Brainbees Solutions saw its shares dip over 3% despite a 61% narrowing of its Q4 net loss to Rs 30.30 crore. While revenue grew 12% year-on-year to Rs 2,163 crore, it declined sequentially. The company anticipates improved growth in FY27, with plans to expand its offline store presence.

The shares of FirstCry-parent Brainbees Solutions declined over 3% to their day’s low of Rs 229 on the NSE on Wednesday even as its Q4 net loss narrowed 61% to Rs 30.30 crore from the Rs 77 crore net profit reported in the corresponding quarter of the previous financial year.

The company released its results on Tuesday after market hours. While losses contracted sharply, revenue grew 12% YoY to Rs 2,163 crore in Q4 FY26, up from Rs 1,930 crore in the same quarter last year.

Although the net loss contracted sharply year-on-year, it increased sequentially from the Rs 28.43 crore net loss reported in the October-December quarter of the same financial year. The firm’s topline also declined 11% quarter-on-quarter from the Rs 2,424 crore revenue reported in the previous quarter of FY26.

The company's adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) stood at Rs 119 crore versus Rs 101 crore in the year-ago period, while the adjusted EBITDA margin in Q4 FY26 was 5.5% compared to 5.2% in Q4 FY25.

Overall for the financial year ending March 31, 2026, FirstCry reported a 23% YoY drop in net loss while revenue grew 12% YoY and EBITDA rose 24% YoY. "With our current initiatives, we believe that structurally the growth rate for both online & offline channels will be much superior in FY27," the company said in an exchange filing.

It added that it witnessed sequential improvement in YoY growth rate for revenue, despite heightened competitive intensity during the quarter. With its initiatives in offline channels, GMV grew in the mid-teens in Q4FY26, the filing said.

Morgan Stanley has maintained its “Equal-weight” rating on Brainbees Solutions Limited with a target price of Rs 300 (10% upside). The brokerage noted that margins were impacted by intense competition in the diapers segment and higher manufacturing costs. Management expects the India business growth rate in FY27 to improve over FY26, while manufacturing-related margin pressures are likely to reverse from Q2 onward. The brokerage added that competitive intensity in diapers could continue for another four to six quarters, even as the company targets adding more than 100 stores in FY27.

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