Shares of Brainbees Solutions, the parent company of FirstCry, plunged nearly 7% on Wednesday after the company’s March quarter earnings failed to cheer investors amid continued pressure on margins and slower growth in key segments.

The FirstCry parent stock dropped as much as 6.8% to ₹221.05 on the BSE, before recovering slightly to trade around ₹226. The market capitalisation of the new-age company dropped to ₹11,790 crore, with 3.55 lakh shares changing hands over the counter.

With the latest decline, the stock has fallen over 21% so far in 2026 and is now trading more than 10% in the past one month. The Brainbees shares, which debuted on August 13, 2024, are down nearly 50% from its IPO price of ₹465. The counter touched its 52-week low of ₹207.10 on March 30, 2026.

Why did the stock decline despite a narrower Q4 loss?

The company, engaged in the business of buying, selling, advertising, promoting baby and kids products, reported a consolidated net loss of ₹48.2 crore for Q4FY26, compared with a loss of ₹111.5 crore in the year-ago quarter. Revenue grew 12% YoY to ₹2,163 crore, while operational efficiency surged with Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) more than quadrupled to ₹70.1 crore from ₹15.9 crore in the year-ago period.

However, investors appeared concerned about margin pressure in its core India business and muted international growth amid heightened competition.

Brokerage JM Financial Limited said FirstCry delivered a “broadly in-line operating performance” during the quarter, although a few segment-level variances weighed on sentiment.

According to the brokerage, the company’s India multi-channel (IMC) business posted gross merchandise value (GMV) growth of 11.8% year-on-year, driven by a 9% increase in transacting users and 10% growth in order volumes. However, growth remained below the company’s historical high-teen trajectory due to intense competition in the diaper category, which accounts for nearly 15% of IMC GMV.

The brokerage noted that aggressive discounting in the diaper segment by quick commerce and large horizontal e-commerce platforms significantly impacted profitability. The IMC segment’s adjusted EBITDA margin declined 210 basis points year-on-year to 7.3%, while gross margin contracted 280 basis points.

Apart from competitive pricing pressure, margins were also hit by rupee depreciation and higher crude-linked raw material costs, which pushed up the cost of goods sold. JM Financial expects some of the input cost pressure to ease by the second quarter of FY27 as companies gradually pass on higher costs to customers.

Despite the margin challenges, the brokerage highlighted that operating leverage and marketing efficiencies helped offset part of the impact, resulting in a modest 30 basis point expansion in consolidated adjusted EBITDA margin to 5.5%.

The international business also remained under pressure. The segment reported muted GMV growth of just 1.8% year-on-year amid elevated promotional activity by competing e-commerce platforms and softer consumer demand in certain markets. Revenue from the segment rose 9.5% year-on-year to ₹230 crore, but the business continued to remain loss-making.

JM Financial said geopolitical disruptions and import-related complexities also weighed on international operations during the quarter. However, the brokerage noted that EBITDA losses narrowed meaningfully, with management continuing to focus on improving topline quality and conversion efficiency.

One of the brighter spots in the quarter was GlobalBees Brands Private Limited, the company’s house-of-brands business, which delivered adjusted EBITDA margin of 5.8%, up 510 basis points year-on-year. The improvement was led by stronger performance in core categories and continued rationalisation of non-core brands.

Management also highlighted encouraging traction in strategic initiatives such as RocketBees, FirstCry Qwik, and offline assortment realignment. These initiatives are aimed at improving customer experience, delivery timelines, and footfalls across offline stores.

According to JM Financial, the company expects a meaningful recovery in IMC GMV growth during FY27 as competitive intensity gradually stabilises and newer initiatives scale up.

The brokerage maintained its “ADD” rating on the stock with a revised March 2027 target price of ₹265. It said while gross margins may remain under pressure in the near term due to elevated discounting and macro headwinds, profitability is expected to improve gradually through operating leverage and in-house delivery initiatives.

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