Brainbees Solutions Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

5
Abhinav Sharma, Anuj Jain, Gautam Sharma, Supam Maheshwari, Vivek Goyal

Analysts

6
Aditya Kumar, Archana Menon, Harsh Gokalgandhi, Jay Laddha, Percy Panthaki, Randeep Singh

Financials & KPIs

Geographic & Segment Commentary

• India Multichannel: Delivered strongest revenue growth in 7 quarters at ~18% YoY, driven by all three strategic initiatives (RocketBees, FC Quick, and offline width-to-depth realignment). Diapering category (15% of GMV) faced heightened competitive intensity but has started to soften in Q2. Non-diapering portfolio (85% of GMV) remains robust. Business continues to be PAT positive. Store expansion plan of ~100 net new stores in FY27, with FY28 expected to be even better.

• International (Middle East): Revenue grew 12% YoY despite ongoing geopolitical disruptions in the Middle East. Both markets sustained healthy growth with AUC +7% and GMV +9%. Gross margin expanded 280 bps YoY, driving adjusted EBITDA loss reduction from -10% to -7% of revenue. Losses reduced by 1,500 bps comparing FY26 vs FY23 full year. Management focused on inputs: improving home brand mix, curating high-margin brands, and acquiring quality customers. Approaching EBITDA neutrality but declined to give specific timeline.

• GlobalBees: Revenue flattish, described as temporary and not structural. Planned transition in one core brand involving warehouse and inventory shifting, expected to complete in Q2 FY27. Growth expected to bounce back from Q3. If adjusted for brand transition impact and Flipkart settlement (~2%), YoY growth would have been in high teens. Adjusted EBITDA margin improved from 1% to 3.9% post-corporate expenses. Growth entirely organic since last acquisition in September 2022.

• Preschool (Brainbees Schools): Strong growth with revenue +47% YoY to ₹19 crores and EBITDA +65% YoY to ₹5 crores. Margin improved from 23% to 26%. Currently operating 500+ preschools under FIRSTCRY and Tellytots brands. Royalty-based model means revenue will remain structurally lower than franchisee-level revenue. Targeting 1,000+ preschools over the next couple of years through organic expansion.

Company-Specific & Strategic Commentary

• RocketBees Delivery Framework: Expanded from 62 to 72 cities; now covers more than 50% of total online shipments, achieving June-end milestone as promised. Delivery turnaround time improved 20%, with lower RTOs and better customer experience. Reverse logistics also now under framework.

• FC Quick: Expanded from pilot (5 cities, ~60,000 shipments in March) to 12 cities, delivering 125,000 shipments in June—more than 100% growth in 3 months. Delivery time reduced from 3 hours to 2 hours in several cities/PIN codes. Ambition to grow FC Quick to 10% of overall shipments, and 20% of volumes in specific PIN codes operated. Built on dark store infrastructure and warehouse network.

• Offline Width-to-Depth Strategy: Product portfolio realignment fully scaled; driving footfalls and conversions. Offline GMV growth of 15% in Q1 FY27, consistent with Q4 FY26. Lower price points added without material gross margin impact. Store expansion paused previously for alignment; now resuming with ~100 net new stores planned for FY27.

• Margin Recovery Roadmap: Q4 FY26 gross margin loss of 280 bps (YoY) attributed to (1) diapering competitive intensity and (2) manufacturing business impact from rupee depreciation and crude-linked raw material prices. Recovered 20 bps in Q1 FY27; manufacturing-related loss expected to be fully recovered by end of Q2 FY27 via price pass-through; diapering competition recovery expected over 4-6 quarters with partial recovery visible from Q2, normalization by Q4 FY27.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Margin Recovery & Input Costs

• Question: How much of the gross margin loss has been recovered in Q1, and what's the timeline for full recovery? (Jay Laddha)

• Answer: 20 bps of the 280 bps loss recovered in Q1. The diapering-related margin loss (started Q3 FY26) is easing with competitive intensity moderating—visible in July/August. Manufacturing-related losses (rupee depreciation, crude-linked raw materials) will be fully passed through to customers by end of Q2 FY27. From Q3 onwards, significant margin recovery expected. (Gautam Sharma, Supam Maheshwari)

• Question: For India multichannel, EBITDA margin fell from 7.3% in Q4 to 5.7% in Q1. Is this largely due to crude-linked inflation? Should H2 FY27 EBITDA margin at least equal prior year? (Percy Panthaki)

• Answer: The 290 bps YoY EBITDA decline bridges as: ~260 bps from gross margin reduction (280 bps in Q4, improved to 260 bps in Q1), and ~30 bps from higher logistics costs (RocketBees, FC Quick initiatives) offset by operating leverage in marketing/fixed costs. The 280 bps gross margin loss will significantly reduce from Q3, with manufacturing component fully recovered by Q2 end and diapering competition recovering over subsequent quarters. (Gautam Sharma)

Growth Sustainability

• Question: Can the exceptional India multichannel growth continue in upcoming quarters? When will margins recover? (Aditya Kumar)
• Answer: Growth should remain elevated driven by RocketBees (>50% online volumes, 20% faster delivery), FC Quick (doubled to 125,000 shipments, expanding city coverage), and offline (15% GMV growth with store expansion resuming). Sequential growth trajectory: 7.5% → 7.9% → 8.9% → 11.4% → 18%. Margin recovery: manufacturing loss fully recovered by Q2 end, diapering competition easing with normalization over 4-6 quarters. Non-diapering 85% of business continues to see margin expansion from fashion and home brand mix. (Supam Maheshwari, Vivek Goyal)

Diapering Competition & Right to Win

• Question: What is our right to win in diapering given aggressive competition from Apollo Essentials, MedPlus private labels, and quick commerce? What's the profitability delta vs non-diapering? (Randeep Singh, Harsh Gokalgandhi)
• Answer: Diapering is a complex category where consumer retention is critical—new private labels struggle to achieve retention. Competition is transitional, similar to 2015-16. FIRSTCRY benefits from being the full destination for babies/kids, home brands with superior products, and FC Quick service (2-hour delivery in 12 cities). Competition intensity already moderating as other players focus on bottom line. Company does not make losses in diapering but margins compressed; profitability delta with non-diapering is significant though narrowing as diapering margins recover. (Vivek Goyal, Supam Maheshwari)

Preschool Business Strategy

• Question: Given Kidzee's struggles, are you considering M&A to scale the preschool vertical, or building organically? (Randeep Singh)
• Answer: Currently 500+ preschools under FIRSTCRY and Tellytots; strong organic growth path with curriculum, discipline, and technology frameworks in place. Franchisee operations leverage FIRSTCRY brand and catchment knowledge. Not currently looking at M&A; targeting 1,000+ preschools over next couple of years. Revenue is royalty-based and structurally smaller than franchisee-level revenue (multiple times larger at franchisee end). Preschool families are power users for FIRSTCRY retail. (Supam Maheshwari, Gautam Sharma)

Offline Growth Drivers & Store Expansion

• Question: What changes drove offline improvement, and what's the store expansion plan? (Archana Menon)
• Answer: Width-to-depth product assortment realignment delivered lower price points, improved conversions and footfalls, resulting in 15% GMV growth in both Q4 FY26 and Q1 FY27. Expanded FC Quick now serving 12 cities (125,000 shipments in June). Store expansion: ~100 net new stores in FY27 (post-attrition), with FY28 expected to be even better as expansion runs full year. Non-diapering consumables salience ~15% of GMV, growing with healthy margins. (Supam Maheshwari, Vivek Goyal)

International Breakeven Timeline

• Question: What's the timeline for international business EBITDA breakeven? (Jay Laddha)
• Answer: No specific quarter committed. Inputs being managed: improving home brand mix, curating high-margin brands, acquiring high-LTV customers, improving service levels. Outputs (EBITDA loss reduction, gross margin expansion, mid-teens growth) reflect this focus. Losses reduced from -16% (March 2025) to -7% (Q1 FY27)—a 9% improvement in 15 months. Positioned to double down on growth when unit economics and gross margins allow leverage. "Sooner than you think" on breakeven timing. (Abhinav Sharma, Supam Maheshwari)

Key Takeaway

Brainbees Solutions delivered its strongest consolidated revenue growth in 5 years at 13% YoY (₹2,106 crores), led by India multichannel growth of 17.7%—the best in 7 quarters—driven by RocketBees (50%+ online volumes, 72 cities, 20% faster delivery), FC Quick (doubling to 125,000 shipments across 12 cities), and offline width-to-depth assortment realignment (15% GMV growth). Consolidated adjusted EBITDA margin dipped to 4.24% (vs 4.98% YoY) due to diapering competition (15% of GMV) and manufacturing input cost inflation, with 20 bps of the 280 bps Q4 gross margin loss recovered in Q1; manufacturing losses fully recoverable by Q2 end and diapering competition normalizing over 4-6 quarters. International business grew 12% with EBITDA losses improving 320 bps to -7%, while GlobalBees' flattish growth is temporary pending a Q2 brand transition, with recovery from Q3. Management guided for elevated India growth through FY27, ~100 net new stores, and preschool expansion toward 1,000+ units. Key watch points include diapering margin recovery pace, Middle East geopolitical stability, and competitive intensity normalization.