Brainbees Solutions Limited (FIRSTCRY) Earnings Call Transcript & Summary

Good evening, everyone. Welcome to Brainbees Solutions Limited Quarter 1 of Financial Year 2027 Earnings Call. This is Harsh Kabra, and I have with me Mr. Supam Maheshwari, Managing Director and CEO of the company; Mr. Gautam Sharma, Group Chief Financial Officer; Mr. Vivek Goel, Chief Business Officer of the company; and Mr. Abhinav Sharma, Country Head of Middle East Business Operations. We also have Mr. Anuj Jain, the Chief Business Officer of GlobalBees. Kindly note that this call is meant for analysts and investors of the company. We wish to highlight that the call is being recorded, and by participating in this event, you consent to such recording, distribution and publication. [Operator Instructions] We will be covering the presentation in the beginning of the call, and we will thereafter open for the Q&A forum. We would like to point out that some of the statements made in the today's call may be forward-looking in nature, and the disclaimer to this effect has been included in the presentation shared with you. With this, I request Mr. Supam Maheshwari to take it over.

Good evening, everyone. Welcome once again to our first quarter of FY '27 performance. Thank you for joining this call. I request if you can put up the presentation, Harsh. At least we can't see it.

Yes, sir, I'm presenting it. Sir, let me know once it is available.

Perfect. Thank you. Yes. So welcome once again. I think, yes, we'll begin with our sort of vision and mission as you are all very familiar with that. So I won't repeat it, but baby's first cry is a special moment for parents. And at FirstCry, we continue to work towards an aim to make this very moment as well as all such moments of parenting journey filled with joy and happiness for all young parents. So that's our mission so far, and we'll continue to drive that going forward as well. So we'll be covering today some of these points, and we'll begin with the first overall performance. So key highlights for the quarter 1 FY '27 performance from a consol business perspective, which is consolidating our India Multichannel, International business, GlobalBees and other segments, which is primarily our preschool business. Overall business has grown 13% year-on-year. This is the strongest revenue growth in the last 5 years that we have demonstrated on a consol basis. And we have also demonstrated a 34% improvement year-on-year basis on a consol basis on loss reduction after tax. Now we'll go into the segmental updates. On India Multichannel, which is our -- the core business segment, reflecting the highest ever -- highest growth rates that we have been focusing on. So you can see on the right-hand side, the quarterly year-on-year sequential growth. And now in this quarter, we have demonstrated around 17.7% revenue growth rate, the strongest again in last 7 quarters. And these are all some of our initiatives that have been at play in FY '26 and even in FY '27 that we have been sharing with you for the last many quarters. With some of our initiatives in the offline channel as well, the GMV of offline continues to again grow in the mid-teens in quarter 1 of FY '27. And with all our current initiatives, which we'll speak in subsequent slides as well, both in online and offline business, we believe that the structural growth rate will remain elevated in the subsequent quarters as well. It's not just a one-off phenomenon. It's what we believe very strongly given what all we have done as a homework as an input to our business structurally, both from an online and offline business perspective. Overall, India Multichannel business continues to be PAT positive for Q1 FY '27. Now moving to International business. The revenue of International business grew by 12% year-on-year for quarter 1. And we -- as we have mentioned earlier, we continue to focus on our sustainable growth while reducing our adjusted EBITDA, adjusted EBITDA for ESOP cost has reduced by 22% -- 22.3% year-on-year basis in Q1 over Q1 last year. With respect to GlobalBees, we have delivered a flattish growth. However, we have demonstrated a very significant improvement in growth of adjusted EBITDA by a factor of 308% from Q1 year-on-year basis. So overall, a very strong performance from an India Multichannel view, a strong growth rate, powered by both online, offline structural improvement through our initiatives that we have undertaken. International business continue to demonstrate a sustainable growth and very laser-sharp focus on improvement of adjusted EBITDA from a losses perspective. Our objective is to solve for becoming an EBITDA-neutral business as soon as possible. And then GlobalBees continue to demonstrate an improvement in adjusted EBITDA as -- so we'll go into a little more detail as we go forward. Overall snapshot in terms of some more numerical data points. Overall consol business, AUTC grew by 10% to 11.8 million. And the GMV grew by 12% to INR 2,807 crores. Overall revenue from operations grew by 13%, INR 2,106 crores and consol EBITDA -- adjusted EBITDA grew to 4.24% versus 4.98% to INR 89.3 crores. Consol gross margin likewise to 36.5% -- from 38.5% and cash after profit to 2.4% to INR 50.8 crores at a consol level for Q1 for the business. Moving further we just focus on India Multichannel on the key initiatives that we have been sharing with you for the last few quarters. The 3 initiatives have really scaled very nicely. Very happy to share updates on all of these 3. RocketBees, which is our internal faster delivery framework that we had started roughly around start -- calendar year start of the last year, and we have been updating on every quarter as we expanded when we spoke last time in May for the March quarter, we have expanded from 62 to 72 cities. And the overall volume that we are covering today at the end of June quarter, as we had promised, we had targeted to take -- cover around 50% of our total online shipment under RocketBees' umbrella and happy to share that we have been able to successfully deliver that milestone. And we continue to grow the network and also witnessing 20% improvement in turnaround time from delivery perspective and growing better growth as well as our customer experience in a very tight sort of a, I would say, industry, where customer experience matters the most. So this overall delivery initiative of RocketBees has been very successful, and we will continue to grow and work harder towards growing more area under the curve. Now on the FC Qwik, while 2 quarters back, we had just started as an experiment, last quarter in March ending in May when we shared this update with you, we were in 5 cities and around close to 60,000 shipments in March. We have now expanded our Qwik from a pilot to a solidifying our sort of a growth strategy, and now we have taken in a full-fledged strategy to now 12 cities and delivered 125,000 shipments, almost a growth of 100% -- more than 100% from March to June, just in 3 months alone. So we continue to see very great customer satisfaction and we will continue to grow with our framework of COCO Stores, our infra of dark stores that we have built out, especially in some cities and some pin codes and our warehouses. All of that collective framework has helped us to grow on the Qwik -- FC Qwik and on a RocketBees sort of platform. And we will -- as I said, we will continue to grow -- we had an overall ambition of growing to 10% of our overall shipment onto the FC Qwik platform. So we are -- and in any specific sort of pin code that we will operate, we will aim to grow to 20% of our volumes. So we'll continue in journey in that direction and has really worked out very well. We have well-oiled our engine, and we'll continue to improve our assortment, continue to improve our overall TAT from 3 hours to many cities and many pin codes, we have reduced it to 2 hours. And we will continue to work towards further reducing it. Yes, of course, not 10 minutes and 15 minutes because we are dealing with a far larger kind of an assortment with fashion and overall non-fashion. The breadth of our universe in terms of FC Qwik is far larger and far superior and serves every bit of a requirement that a young mother and a young father will look for. So it really is solving the pain from the new generation or the new customer expectations that we are able to fulfill for Gen Z parents and Millennial parents. Third initiative that we have been speaking about. It's in full flow now. We had talked about that we will realign our product portfolio from a width to depth strategy has really fully scaled out. The impact of this was visible even in last quarter, and it continues in this quarter. It has helped us to drive footfalls, conversions, both of them, and we continue to deliver 15% GMV growth for our offline business in Q1 FY '27. So we are very extremely positive, bullish on all the 3 initiatives. We'll continue to scale the first and the second and continue with the third refinement of the third initiative, which is offline to continue to drive a new store growth expansion as well in the subsequent quarters because we had paused it a little bit to make sure that we align our product portfolio, we bring back capital efficiency and then grow from there onwards. We have seen that now for 2 quarters, and now we'll be expanding as you will see in our subsequent quarters to come, the growth rate should remain elevated. So with that, I think I've explained all the 3 initiatives in as much detail. Of course, any more questions, we'll take it at the end. Moving further, I will ask Vivek to take over the further updates on the India Multichannel.

Thank you, Supam. So some of the key updates on India Multichannel business. We have continued sequential improvement on year-on-year growth in revenue with the strongest growth that we have demonstrated in India Multichannel business in the last 7 quarters. Our diapering category continues to witness heightened competitive intensity during the quarter. However, the same has started to soften a bit in this quarter, in the current ongoing quarter. Our non-diapering portfolio, contributing to 85% of our GMV, remains robust and continues to perform really well for us. So our AUTC growth has been at 10%, orders growth is much healthier at 12% and the GMV growth is at 12% as well. We can move to the next slide. So we have delivered a strong revenue growth of 18% Y-o-Y in Q1. This growth was accompanied by some moderation in gross margins on a Y-on-Y basis, which resulted in EBITDA margin being lower on Y-o-Y basis. In order to explain the moderation of the gross margin, we will take a step back. And I'll take you to Q4 where the gross margin moderated by 280 bps largely because of 2 reasons. One, competitive intensity in diapering category, which constitutes to about 15% of our business, putting pressure on our margins. Secondly, the impact on gross margins in our manufacturing business because of rupee depreciation and increase in crude-linked raw material prices. While we recovered 20 basis points of this lost gross margin in Q1, we believe the margin recovery in subsequent quarters will be much faster due to the following reasons. One, again, margin moderation, which was largely because of competitive intensity in diapering category, has started bouncing back since we are seeing the reduction in competitive intensity in market signals in the ongoing quarter. On the loss of margins in manufacturing business, we have started passing the increase in crude-linked raw material prices in manufacturing business to our customers and expect to fully recover it by the end of this quarter. I think we can move to the next slide. I'll hand over to Abhinav for the International business updates.

Good evening, everyone. For the International business in this quarter, Q1 of FY '27, we continued our focus on a sustainable growth, as we've mentioned in the previous quarters as well. So Q1 FY '27 revenue growth was 12% Y-o-Y with more importantly, adjusted EBITDA loss reducing by 22% in the comparative quarter. As we all know, there are some geopolitical disruptions ongoing in the Middle East. However, our Middle East business go-to-market sustained a healthy growth and a higher potential. More importantly, it reflects on the higher potential when the environment is largely stabilized, hopefully in the near term. So our AUTC grew by 7%. GMV grew by 9% in comparative quarters, FY '27 versus FY '26. Next slide, Harsh. We talk about sustainable growth on the back of expanding margins and reducing EBITDA losses. As you can see, we grew 12%, which came with also a gross margin expansion in the comparative quarters by about 280 bps, which then resulted also in the adjusted EBITDA losses by 22% in absolute terms. And in loss terms as compared to revenue, we had an improvement by 320 bps from 10% to 7%. Harsh, next slide. As you can see, we've mentioned in over the last 4 or 5 quarter calls that we will be continuing to reduce our losses as we move forward and sustainably grow the business in the Middle East. FY '23 in comparison, if you compare FY '26 versus FY '23 full year, there has been a reduction of 1,500 bps in our losses. And if you compare the quarterly loss comparative quarters FY '27 versus FY '26 Q1, we have a 320 bps reduction in losses. Our focus has been on reducing these losses and our path to profitability while we grow the top line sustainably. Anuj, over to you.

Thanks, Abhinav. Good evening, everyone. The update on GlobalBees. So revenue has been almost flattish for the quarter. This is a temporary state and not a long-term structural change in the business, and I'll explain later why. Core categories of GlobalBees have grown by 2%. The margin profile for core brands continue to be strong and we posted a 4.3% adjusted EBITDA margin post corporate expenses. So a key factor that affected the growth was a planned transition in one of our core brands. It is related to a longer-term normalization of business operations and involved the shifting of the business warehouse and inventories. This is a temporary and planned transition that should be completed in quarter 2. And therefore, we expect the growth to bounce back starting quarter 3. If I assume that we have done the same business for this brand as quarter 1 of FY '25 and take a very nominal growth and on top of that, add the impact of Flipkart settlement, which is about 2%, the year-on-year growth for this quarter would have been in the high teens. And that's why I was saying that this is not a structural change in the GlobalBees business. We will very much be back on track by quarter 3. This growth is entirely organic as our last acquisition was in September 2022. Harsh, next slide. So what we've been doing is also focusing on expanding margins. So if you see that while there's been a slight drop in our gross margins, overall, our adjusted EBITDA has grown from 1% to 3.9% and this continues to be a strong focus for us as we move forward. The overall momentum on the adjusted EBITDA continues year-on-year, we've been demonstrating a strong improvement in margin profile and the same thing is visible in the quarter-to-quarter year-on-year change of 290 bps. Like I said, we will continue to focus on improving our profitability as we go forward.

Yes.

Yes.

So this is our business segment which is the preschool business. Both revenue and the EBITDA growth was very strong in Q1, a 47% growth in the net revenue from INR 13 crores to INR 19 crores and a 65% jump in our adjusted EBITDA from INR 3 crores to INR 5 crores in Q1 FY '27. Next slide. So -- yes, next. So before I talk about -- yes, next slide, Harsh. Before I talk about the consol, just a quick recap on various business segment numbers, why there's an impact on the adjusted EBITDA margin, which Vivek talked about. He explained in detail why the margin has dipped and going forward, the recovery of margins should be much faster. Happy to mention that we have delivered a very good growth in the India Multichannel business. It's best in last 7 quarters. International business, despite of the geopolitical tensions in Middle East, we have delivered a 12% growth and a very healthy reduction in our EBITDA from 10% to 7%. GlobalBees, while the revenue growth or our flattish growth in GlobalBees business is temporary, we have focused on improvement of EBITDA margin, which has improved from 1% to 3.9% in Q1 FY '27. And the school segment continues to do very well, a 47% jump in the revenue and 26% EBITDA compared to 23% in Q1 FY '26. Combining these 4 segments, next slide, Harsh. We get these numbers a 13% growth in revenue, best in last 5 quarters, and consol adjusted EBITDA on absolute value more or less remain the same, largely because of some impact on our EBITDA in the India Multichannel business. However, we will continue to improve this in subsequent quarters. One important thing I would like to mention is that while this is the adjusted EBITDA 4.24% on the net revenue, we have increased our EBITDA by almost 80% on a Y-o-Y basis in Q1 FY '27, compared to Q1 FY '26.

If you adjust for the ESOP cost.

Yes. This is after the adjustment of ESOP cost, yes. That's it.

Okay. Thank you, team. We can wait for a minute for the queue to get full, and then we can start with the Q&A. [Operator Instructions] So the first question is from Jay Laddha.

So the numbers are very much good, and all -- means like, the whole business is totally recovered from the few -- means the past losses. Now my question is related to the gross margin and manufacturing losses. So basically, you guided that in Q2 FY '27, we will get fully normal. But so you haven't mentioned that number anywhere. So my curiosity is to know that in Q1, how much that has been recovered?

So is the question linked to the India Multichannel business gross margin, Jay?

Yes, consolidated related overall. Overall.

So see, if you see the Middle East business, see, gross margin on all the fronts, except the India Multichannel business, has improved. Gross margin for the International business is continuously improving. Gross margin, if we exclude the impact of the change in the revenue recognition done by Flipkart, I think we are more or less similar in terms of gross margin compared to Q1 FY '26. Gross margin for the school business is also continuously improving that is evident from the improvement in EBITDA. So now what remains is the gross margin of India Multichannel business, which Vivek talked about that we have recovered around 20 bps. So what he has done is he has taken you to Q4 -- back to Q4 where we have lost around 280 bps of gross margin, out of which 20 bps of the gross margin is recovered. The 2 reasons which contributed to this loss of gross margin was, A, heightened competitive intensity in the diapering category, which has started easing out. It's clearly visible and we should see the impact on the gross margin in Q2. The second reason was the rupee depreciation and the increase in the crude-linked raw material prices, which we said that we have started passing on those price increase to our customers. And by end of Q2, I think we should be able to pass on the entire increase to the customers. So on both the fronts, you will see the gross margins continuously increasing or improving. While structurally, other factors will continue to help us expand the gross margins, which includes continuous increase in the home brand mix, fashion mix, negotiation of marginal third-party brands.

Yes. And another question is that International segment -- means breakeven -- means like what period should be there? And FY '27 full year guidance? Means like any updates related on that?

So Gautam, do you want me to take this?

Yes, please.

So for the -- so Jay, on the breakeven point as far as time lines, we would want to avoid a specific quarter that we want to give out. However, what I can tell you about the trajectory. So if you look at the last quarter presentation, there was one of the slides that showed you the gross margin sort of a trend in comparison to India at the same similar age of the business. So we are very much there. Secondly, as you can see, our input -- so these numbers, EBITDA and the growth and the gross margin expansion are all output numbers. But if you -- how do we arrive at that? Input is where we need to be more -- so the comfort level should be coming from the input side of the business. And I can say that from an input side of the business, we continuously focus on without deviation on reducing our burn and growing the top line. How do we do this? One fundamental thing is improving our home brand mix in the top line -- of the top line. Second is also curating the brands that are high gross margin brands. Third is acquiring extremely high-quality customers at this stage in the business who have a lifetime value of our liking. When you do these 3 things and obviously, service levels, we continuously improve and work upon our service levels in the Middle East as well. So once you do these things, the comfort comes from -- you see the numbers, EBITDA losses reducing, you see gross margin expansion, you see a sort of an early teens to mid-teens sort of growth every quarter when you compare. So once we achieve -- once we are at a stage where we believe our unit economics and our gross margin sort of stack up to allow us to be more aggressive and double down on our growth trajectory, which then obviously will give us the leverage on the bottom line. I think that is where I wanted to explain how we are approaching the business in the Middle East. Now having said all of this, we all know what's going on. We all know the situation is not ideal, so to speak. But we have taken -- as a business, we have taken this as an opportunity rather than a challenge -- ecosystem challenge. We've taken it as an opportunity where we've seen our own brand continuously performing, continuous expansion in gross margins and continuous sort of top line growth. So from a comfort standpoint, there are many variables, many numbers that should give you a comforting sort of a feel, and this is for everybody on the call. A comforting feel to where the business is heading. Putting a time line is probably, I would say, very tricky at this point in time, but sooner than we think. Let's put it that way.

I think the great testimony is basically March '25 number was minus 16%, which has come down to minus 7% in Q1 FY '26 -- FY '27. So in a span of 15 months, the losses has reduced by 9%.

And it will continue to go down as we go along in subsequent quarters as well.

Yes. Yes, I understand all the things. Basically, the business is totally recovering from the past losses, and it's good to see that.

So next question is from Aditya Kumar.

So I have 2 follow-up questions. One on the growth and second is the margin. I will take first on the growth. So I think it's good to see exceptional growth in the multichannel business in the current quarter. Will we be able to see similar type of growth in the upcoming quarter? This is my question on the growth. And on the margins, when we will be able to see and the management believe how we will be able to recover the margin, which has been lost in the multichannel business. So this is 2 questions from my side.

Sure. So I think on the India Multichannel, your question was related to India Multichannel, right?

Yes.

Yes.

So India Multichannel, I think we demonstrated almost 18% growth, that was the highest in the last 7 quarters, as we mentioned. We believe that for the next few quarters, it will remain elevated as well because of the input that we have been sharing with you that key initiatives, all of them are focused towards our online and offline business. RocketBees has helped us to improve customer experience, improve 20% of the delivery TAT. And now as we have just mentioned that it has gone to more than 50% of our total online volumes as a delivery framework. So -- and we have also started reverse as well. So I think with all of that, customer experience is bound to improve. And thereby, that is what we had visualized a few quarters back. That is what the business was suffering from. We have fixed it. We'll continue to even improve further. So the growth will remain elevated on that front. Second, on the FC Qwik, you have seen the numbers we've just shared from 60,000 in March in 5 cities, now in 12 cities, 125,000 numbers in June, almost doubling up. And this is -- and also reducing our time line from 3 hours to -- in a few pin codes in a few cities to 2 hours. And our ambition is to even go lower. So with that, the customer experience is further improving. And obviously, on the offline side as well, we have demonstrated 15% GMV growth simply because of our assortment -- product assortment that we talked about from a width to a depth strategy to be able to offer products to some lower price point as well without really having a material impact on the gross margin, which is what we have demonstrated. We have tested success from the -- we had planned it from FY '26, and we saw the impact of this in Q4 of last year, and we continue to see the impact in Q1. With this, now we will double down on opening more stores as well, which will further accelerate growth. With all of this and the improvement in the product availability itself is something that we have worked very hard, which we had also struggled a little bit in between because of a lot of geopolitical situations into some of the brands and in our footwear category. Some of those also have been fixed. With all of these improvements, we continue to strongly believe that our growth rate will remain elevated in India Multichannel for the subsequent quarters for FY '27. On the margin...

That is evident from -- if you see the sequential growth of the revenue in India Multichannel business every quarter, right, from 7.5% in Q1, we have sequentially improved the growth from 7.5% to 7.9%, 8.9%, 11.4% and now almost 18%.

And on margin front, I think the explanation is very simply given by both Vivek as well as Gautam. I think our 280 bps loss or a drop in Q4, we believe we'll be recovering it, although there's a recovery of 20 bps only in Q1. We believe we will have a much faster recovery. We are already seeing a little -- less competitive intensity than what we had seen for the previous 2 quarters -- and with a lesser competitive intensity. And this is all happening because of the market dynamics and everybody is trying to focus more on the gross margin and bottom line. With that, I think this exactly phenomenon happened in 2015, 2016 as well and same is happening again. We had mentioned in our last quarter as well that it will take 4 to 6 quarters to fully sort of normalize. So we believe that the -- and which we have just started to see in Q2 as we speak in this quarter in both July as well as in August, we are seeing better -- a benign state in terms of competitive intensity, lesser than what we had experienced in the past, which will have an impact -- positive impact on the retention of gross margin, drawing back from that 280 bps or 260 bps recovery period. And second, on the crude-linked as well as the raw material price or the rupee depreciation, I think by end of this quarter, we'll be pretty much recovered from that as we pass on to the customer. So you will see the impact positive in Q2. Q3 onwards, you'll see a full -- most likely full recovery. So I think with that, the margins will also come back. Growth will remain elevated. So we believe we are back to be happy in a state where we want it to be. Obviously, we'll continue to strive even superior, even better outcome than what we just talked about. But I hope that answers.

And just to add on the margin front, actually, the remaining 85% of our business, which is non-diapering will also continue to accrue higher margins with the levers of increasing fashion contribution and home brand contributions. So yes.

Next question is from Randeep Singh.

Sure. Just inquisitive, what is our right to win in the diapering space, given we've been seeing aggressive competition. And if you see the overall ecosystem, someone walks into an Apollo Pharmacy, now Apollo Essentials have launched their diapers or there are MedPluses in societies which are 2,000-plus apartments. MedPlus has launched their own diapers. Now are we in a market which is intensive competition, which we've been seeing for the last couple of quarters. Now what is the school of thought at the management level to really crack this space? That's my first question.

Sure. Vivek, do you want to go ahead? Or should I take that?

So Supam, I'll go ahead and then you can carry forward from there. So see, diapering is a complex category. And the consumer retention on the product is very critical. And that is where it is not easy for any brand like Apollo Pharmacies or any other private label product to be able to have high retention rate because essentially, it is being used on a baby. So from that window, the real, I would say, disproportionate pricing kind of a strategy happens on the established brands, where other e-commerce players or quick commerce players try to attract consumers with very, very aggressive pricing for a limited period of time. That's what you have seen as Supam was mentioning, it had happened during '15, '16 period. That's been happening with the aggressive expansion of quick commerce over the last 2, 3 quarters. We have already started seeing a bit of improvement in this quarter on the branded side of the diapering category. And essentially, everything else follows that. So fairly confident that the category itself will optimize over the next couple of quarters. Supam, you want to add on anything on this?

No, I think -- and Randeep, we are also adding our FC Qwik. If you think of it, customers who are very loyal or who want to remain in our platform because we offer the full destination for babies and kids. So young mothers and young fathers who are not solving for like a 10-minute or like Apollo Pharmacy or any other particular brand. Most of it is available with us. Now we are also solving in 2 hours and 3 hours through our FC Qwik in 12 cities, and we'll continue to expand there. And with that framework, we should be able to retain those customers and get a larger benefit. So we remain very confident on that. When a couple of quarters -- it is the same playbook that has happened in, as I said, 2015, 2016. So it's just going to be coming back in a different form because we had to do FC Qwik. At that time, FC Qwik did not exist or that customer expectation did not exist. But now we are doing it with the revised or with the new sort of customer expectation. And obviously, we have done fairly well in terms of -- I just talked about how much we have done in FC Qwik. With that, we believe that new onboarding of customers happens largely with us because of the FirstCry as a brand, as an ecosystem, as a destination, which all young parents or young mothers, while they are pregnant, they all know about it. So we are their favorite. I mean, in that sense, sort of a destination. Rest, I think we have to deliver that service to continue to retain, which we are on that path. So -- and we only digressed from a margin loss perspective from Q3 onwards, but we have started to see some recovery. And hopefully, we'll see a much faster recovery going forward as well.

Sure. Noted. My second question was with respect to our fourth business vertical, while which is very small and I understand the base effect and hence, we are seeing aggressive growth. Just wanted to understand what is management thinking in terms of making the vertical? And is there a scope and opportunity of a merger and acquisition that we are exploring? I mean case in point being the #1 player, which is Kidzee, where the group is in shambles, so it's a great opportunity. So are we thinking through of building with a model which is like growing at 100% per year basis? Or are we then acquisition to make this a larger vertical?

So look, I think we will continue to grow. Currently, we have almost 500-plus preschools under our umbrella at FirstCry Intellitots. And so, we will continue to grow for sure rapidly. I think the salience is in the framework, in our curriculum framework that we have built in the disciplined framework of what we have built as a technological framework as well as curriculum framework and execution framework. So while these 3 frameworks are already in place, we understand the franchisee operations that we have done even in our offline business for our stores. So we are able to -- with our FirstCry brand, which is the largest destination for mothers, baby and kids, we understand -- we already know the kids and the babies and kids for our preschool business in every catchment in the country pretty much. So our natural ability to be able to partner with far more number of franchisees and business partners in the preschool to continue to grow expansion in new and new cities and within the cities, same cities in more dense areas, that we will continue. I won't be able to comment on the M&A. It's too early. I don't think we are looking at it yet. But we have a very solid organic growth path forward. And we believe over a period of time, we should not be looking for less than 1,000 preschools over the next couple of years.

And Randeep, on your point of a lower base, structurally, the business will always have a lower revenue. It will never contribute a significant amount to the overall revenue because it's a royalty-based model, right? So if you convert this revenue to the revenue accrued at the franchisee you can multiply by almost multiple times to get the actual revenue being made by franchisees.

So we remain quite bullish on that is I would say we'll continue to grow organically on that business. I think we are still a few years before we become a very big force on the preschool side of the business. And this strategically fits very well as well because some of the -- most of our kids and the parents that are associated and part of our preschool sort of framework are power users for FirstCry as well from a retail perspective.