Devyani International’s IPO was completely subscribed in 3 hours of bidding on the initial day of sale. Retail investors led the bidding, oversubscribing their portion of the Rs 1,838 crore IPO inside the opening hour. Devyani International, the biggest franchisee of Yum Brands in India, operators a chain of swift-service restaurant brands such as KFC, Pizza Hut and Taco Bell. The public concern is a mix of a fresh concern of equity shares and an provide for sale (OFS) by current shareholders of the corporation. Devyani International is one of the 4 IPOs that opened today for subscription.
Retail investors oversubscribe
Retail investors have subscribed the concern 5.34 instances their portion, bidding for 10.87 crore equity shares against 2.03 crore on provide. The non-Institutional Investors (NII) portion has been subscribed .11 instances only so far on day one of the IPO, with bids received for 32 lakh shares against 3.05 crore shares on provide. Qualified Institutional Buyers (QIB) had been however to subscribe in substantial numbers. QIBs have bid for 1.1 lakh shares against the 6.11 crore on provide. The employee portion of the concern was subscribed .30 instances. Overall the concern has been subscribed one hundred%. Shares of Devyani International are anticipated to list on August 16, 2021.
Investors can continue to bid for the concern in a fixed cost band of Rs 86-90 per share till Friday evening. The minimum bid lot for the concern is of 165 equity shares, translating to a minimum investment of Rs 14,850. Devyani International’s Rs 1,838 crore IPO, only Rs 440 is a fresh concern of equity shares even though the remaining is an OFS by current shareholders. The promoter group presently holds a 75.8% stake in the corporation, which will be lowered to 65.2% post a productive listing on the bourses. The public shareholding will boost from 24.2% to 34.8%.
Grey industry premium at 66%, need to you acquire?
In the unlisted space, Devyani International shares had been trading at a premium of Rs 60 per share or a 66% premium more than the IPO cost of Rs 90 apiece. The premium in the grey industry has soared from the earlier week when Devyani International was trading at Rs 50 per share. “Amidst the pandemic, Devyani International has continued to expand their store network and in the 6 months ended March 31, 2021, they opened 109 stores in their Core Brands Business. The QSR companies have grown the fastest among the Food Service industry at 5.5% CAGR during FY2015-20 and it is expected to grow at a much faster rate of 12.4% over FY2020-25,” analysts at LKP Securities stated even though pinning a subscribe rating on the concern.
Analysts at ICICI Direct worth the corporation at 7x cost/sales (post concern) FY20 on upper band. “We believe DIL would be able to capture the growth owing to metro lifestyle and outside food habits. This, coupled with the company’s cost rationalisation initiatives will help drive profitability in future. We recommend Subscribe to the issue,” they added.
Devyani International, regardless of its substantial presence is nevertheless a loss-creating entity. “While the company has reported losses over the past three years, the losses have halved over the past year, due to various steps such as downsizing its stores, to cater to rising deliveries, rather than dine-ins amid the pandemic,” INDmoney – a SEBI registered investment advisor stated in a report. “Devyani International IPO is priced at a Price/ Sales ratio of 9.54 times on a post-issue fully diluted basis (based on FY21 sales). This is lower compared to its listed peers Jubilant Foodworks (12.88 times), Burger King (14.92 times) and Westlife Development (9.81 times). However, as Jubilant Foodworks has superior profitability and return ratios, it is expected to command a premium valuation,” they added.