Devyani International Limited (DIL), is preparing to go public with its Initial Public Offering (IPO). The IPO will open on 4 August 2021 and close on 6 August. Any anchor booking that can happen will happen on August 3. The IPO carries a price band of Rs 86 to Rs 90 per equity share with a face value of Rs. 1 per share. gray market premium for IPO On Tuesday, it was at the level of Rs 59 to Rs 62. This means that the shares were trading at a price of Rs 145 to Rs 149 per share in the gray market. On a higher level, it indicated that the shares were trading at around Rs 148 to Rs 152 per equity share in the unlisted market.
NS Devyani International IPO It wants to raise Rs 1,838 crore from its public issue. This amount includes Offer for Sale (OFS) and a fresh issue. The OFS looked at Rs 1,398 crore with 155,333,330 equity shares as face value of Re 1 per share. On the other hand, the fresh issue total reached Rs 440 crore.
The IPO had listed its investor stake in three categories, Qualified Institutional Buyer (QIB), Non-Institutional Investor (NII) and Retail Investor segment. 75 per cent allocation was set aside in the QIB segment of investors, 15 per cent in the NII category and 10 per cent for retail investors.
The company’s objective for the IPO is to use the net proceeds for repayment and prepayment for all of the company’s borrowings. The rest of the fund will go towards general corporate purposes.
Speaking on the public issue outlook, Amarjit Maurya – AVP – Mid Caps of Angel Broking Ltd said, “Devyani International Limited (DIL) is the largest franchisee of Yum Brands in India and one of the largest chain operators of quick-service restaurants. One is (“QSR”) in India on a non-exclusive basis, and operates 696 stores in 166 cities in India as of June 30, 2021. Yum! Brands Inc. operates brands such as KFC, Pizza Hut and Taco Bell. and has a global presence with over 50,000 restaurants in over 150 countries as of December 31, 2020. In addition, Devyani International is a franchisee for the Costa Coffee brand and stores in India.”
The IPO has been widely welcomed and highly anticipated thanks to its presence in key consumption markets and its cluster-based approach. It has also harnessed and established cross-brand synergies with operational leverage. Other factors that make it an attractive public issue to subscribe to are its disciplined financial history, which focuses on cash flow and returns, as well as the company’s distinguished board of senior managers. It should be noted that Devyani International is in business since 1991. Today the brand stands as one of the largest quick-service restaurant (QSR) chain operators in the country. Devyani International is a popular QSR brand in India due to its oversight of popular brands like KFC, Pizza Hut and Costa Coffee. It also has a strong presence in metros and adjoining areas.
The company reported an operating profit in each of the last three years, despite the fact that it also saw a net loss in the same period. In two out of three years, net worth remained in negative territory. However, funds have been pulled in the year ended March by Yum India, RJ Corp and other investors who have injected fresh funds into the company.
Devyani International is considering the allotment date of August 11. The return and recognition of shares will take place on August 12 and August 13 respectively. As far as the listing is concerned, the date has been fixed for August 16, but it is yet to be confirmed.
Should you subscribe to Devyani International IPO?
On whether one should subscribe or not, Maurya said, “DIL operated 284 KFC stores and 317 Pizza Hut stores and 44 Costa Coffee stores in India as of June 30, 2021. In their core brand business, their extensive Presence was in 26 states and 3 union territories of India as of June 30, 2021. As far as peer comparison is concerned, post-issue FY2021 EV/sales from -9.9x (at the upper end of the issue price band) , which is lower as compared to peers (Jubilant Foodworks-15.4x, Burger King India-14.8x, Westlife Development – 10x). Also, Devyani International has better operating margin as compared to Westlife Development and Burger King. We believe this rating is at an appropriate level. Thus, we recommend a membership rating on this issue.”
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