Devyani International’s Rs 1,838 crore IPO has been subscribed 9.56 instances so far on the final day of sale, with all pockets of investors oversubscribing their portion of the problem. Retail investors have subscribed the IPO in the highest numbers so far. Devyani International is the biggest franchisee of Yum brands in India and operates brands KFC, Taco Bell, and Pizza Hut beneath its banner align with Costa Coffee. Devyani International’s IPO has seen powerful demand from investors because opening on Wednesday and was totally subscribed inside 3 hours of the 1st day of bidding.
Devyani International’s IPO can be subscribed by investors in the fixed cost band of Rs 86-90 per share, in a bid lot of 165 shares. From the all round 11.25 crore shares on supply, investors have placed bids for 107.5 crore shares or 9.56 instances the problem size. Retail investors have bid for 58.8 crore shares or 28.87 instances their quota. NIIs have placed bids for 36.82 crore shares or 12.05 instances the reserved portion, when Qualified Institutional Buyers (QIB) have subscribed their portion of the problem 1.92 instances, putting bids for 11.76 crore shares. The IPO is a mix of an supply for sale (OFS) and a fresh problem of equity shares.
In the unlisted space, shares of Devyani Internation had been trading at a premium of Rs 65 per share or 72% above the IPO cost. Devyani International has continued to trade at a steady premium because the IPO opened for subscription, folks dealing in the grey marketplace stated.
The business caters to an desirable sector that is anticipated to develop at 12% CAGR more than the next 5 years. “QSR is expected to experience a rise in the number of transactions and average transaction amount due to the short service time at an affordable price offered by QSR,” domestic brokerage and study firm ICICI Direct stated in a note. “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,” they added when pinning a ‘Subscribe’ rating on the IPO. The brokerage firm believes that the IPO is priced at 7x cost/sales (post problem) FY20 on upper band.
Post-IPO, promoters of the business will hold a 67.99% stake in the business when public shareholding will raise to 32% from 24.2% presently. Devyani International also operates KFC and Pizza Hut retailers in Nigeria and Nepal, providing it international exposure. Analysts at Ventura Securities have a ‘Subscribe’ rating on the problem. “ Our target price of Rs 149.8 (59.9X FY24 EPS) represents a potential upside of 66.4% from the offer price of Rs 90 (upper limit of the band) over a period of 18-24 months,” they stated.