India's "third largest IPO" surged more than 50% on its first day of trading

Recently, India has sparked an IPO frenzy, with baby product retailer Brainbees Solutions Ltd. seeing its stock soar by 52% on the first day of trading, stealing the spotlight. On Tuesday, August 13th, SoftBank-backed Brainbees debuted on the Mumbai Stock Exchange, setting a record for the highest first-day gain of any major IPO in India this year, closing at 679.10 rupees, well above its IPO price of 465 rupees. As the third largest IPO in India this year, Brainbees raised nearly 42 billion rupees (USD 500 million), with oversubscription exceeding 12 times. India's IPO Fever is Strong This IPO comes amidst a period of strong demand from investors, driving the Indian stock market with a market value of 4.9 trillion USD. On the same day, another SoftBank-backed Indian company, Unicommerce eSolutions Ltd., saw its stock price more than double on its first day of trading. Electric scooter manufacturer Ola Electric Mobility Ltd. also saw its stock price hit the 20% daily limit for two consecutive days after its listing last Friday. As of 2024, Indian companies have raised 7 billion USD through IPOs, a significant increase from 2.6 billion USD in the same period last year. Among them, Ola's 733 million USD IPO became the largest local IPO so far this year, followed by Bharti Hexacom Ltd.'s 512 million USD IPO in April. Pranav Bhavsar, a consumer analyst at Trudence Capital Advisors, said, "Overall market sentiment is positive following the rise in Ola's stock price." Brainbees' Valuation is Relatively Low Despite Brainbees' impressive stock performance, its valuation remains relatively low. Sumeet Singh, Head of Equity Research at Aequitas Research Pvt., said: "Compared to other companies recently listed in India, Brainbees' valuation seems relatively cheap, which is one of the reasons for its stock surge. However, Brainbees' growth lags behind its peers in the Indian internet industry, proving that its valuation discount is reasonable." Established in 2010, Brainbees' brand FirstCry sells mother and baby products through online platforms and physical stores. As of March 31st, the company reported a loss of 3.2 billion rupees. Devi Subhakesan, an analyst at Investory Pte., pointed out that the company will face long-term competitive pressure in the online business from major e-commerce competitors like Amazon In addition, according to Brainbees' prospectus, the company plans to use the funds raised from the IPO to open new stores, pay rent, and expand overseas business. Currently, Brainbees operates in the United Arab Emirates and Saudi Arabia