Devyani International’s Rs 1,838 crore IPO opens today for subscription. The organization is the biggest franchisee of Yum Brands in India and is amongst the biggest operators of chain speedy-service restaurants operating brands such as KFC, Pizza Hut and Taco Bell. The company’s public situation is a mix of a fresh situation of equity shares and an supply for sale by current shareholders. Ahead of the IPO, Devyani International has raised Rs 824 crore from anchor investors that incorporate marquee foreign investors. The IPO will stay open for subscription till August 6.
About the situation
Investors can bid for the situation in a fixed cost band of Rs 86-90 per share, in bid lot of 165 equity shares, translating to a minimum investment of Rs 14,850. Of the total situation, Rs 1,398 crore is an supply for sale when the remaining Rs 440 crore is a fresh situation of equity shares of the face worth Rs 1 per share. 75% of the complete situation is reserved for Qualified Institutional Buyers (QIB) when 15% is for Non-Institutional Investors (NII) and the remaining 10% for retail investors. Devyani International is seeking to repay or prepay all or particular of the company’s borrowings working with the funds raised via the fresh situation. Currently, the promoter group holds a 75.8% stake in the organization, which will be trimmed to 65.2% post situation. The public shareholding will improve to 34.8% from the present 24.2%. Ahead of the IPO, shares of Devyani International had been trading at a premium of Rs 64 per share.
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Anchor investors pump in Rs 824 crore
Ahead of the IPO, Devyani International has allocated 9.16 crore equity shares to 63 anchor investors for Rs 824 crore at the greater finish of the cost band. Abu Dhabi Investment Authority, Fidelity Funds, Goldman Sachs, Government of Singapore, Nomura, Vantagetrust, CLSA Global, BNP Paribas, Kuwait Investment Authority, and Macquarie are some of the marquee foreign investors that have picked up a stake in the organization via Anchor investment. ICICI Prudential. Tata Mutual Fund, Mirae Asset, Sundram Mutual Funds, Nippon Life India, and Aditya Birla Sun Life are amongst the domestic investors who have invested in the organization.
Should you subscribe?
Devyani International has a international presence with more than 50,000 restaurants in more than 150 nations, at the finish of 2020. “Considering the FY-21 adjusted EBITDA of Rs 1789.23 on post-issue basis, the company is going to list at EV/EBITDA of 62.39 with a market cap of Rs1,08,227 mn, while its peers namely Jubilant Food and Westlife Development are trading at EV/EBITDA of 66.02 and 206.11 respectively,” stated analysts at Marwadi Financial Services.
Devyani International operates 3 small business verticals such as. Core Brands Business (KFC, Pizza Hut, and Costa Coffee retailers in India), International Business, and Other Business The company’s income from core brands small business, with each other with their international small business, represented 83.01%, 82.94% and 94.19% of income from operations in the preceding 3 economic years. The brokerage firm has a “Subscribe” rating to the IPO.
Analysts at Angel Broking, worth Devyani International on the post-situation FY2021 EV/Sales at -9.9x to (at the upper finish of the situation cost band), which they say is low compared to peers such as Jubilant Foodworks-15.4x, Burger King India -14.8x, and Westlife Development – 10x. “Devyani International has a better operating margin compared to Westlife Development & Burger king. We believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue,” they added.