The public issue of Barbeque Nation Hospitality, a casual dining restaurants chain, has subscribed 5.98 times on the final day of bidding, March 26, receiving bids for 2.99 crore equity shares against the offer size of 49.99 lakh equity shares.
The offer size has been curtailed to 49.99 lakh equity shares from 90.71 lakh equity shares after the company garnered Rs 203 crore from anchor investors on March 23, a day before the issue opening.
The portion set aside for qualified institutional buyers witnessed a subscription of 5.11 times and that of non-institutional investors received 3.10 times bids.
The retail investors seem to be bullish on the last public issue in the month of March as their part was subscribed 13.13 times, while employees have put in bids 1.02 times more than their reserved portion.
Barbeque Nation targets to mop up nearly Rs 453 crore through its public issue which comprised a fresh issue of Rs 180 crore and an offer for sale of Rs 273 crore by existing selling shareholders including promoters.
Also read: Our in-house research team's take on Barbeque Nation Hospitality IPO
The company will utilise the net fresh issue proceeds for repaying outstanding debt.
During FY18-FY20, Barbeque Nation's revenues have grown at CAGR of 20 percent while EBITDA grew by 10 percent. The company is consistently earning margins in the range of 22-24 percent, though it constantly reported losses during FY18-FY20 as well as in the eight months period ended November 2020 due to COVID-19 pandemic.
Nirmal Bang believes the company has robust engine and would be back on track soon. It further believes the more accurate method is comparing operating cash flows which has been positive for past 4 years after paying lease liabilities and interest cost.
Also read: Barbeque Nation Hospitality IPO closes today: 10 key things to know before the issue opens
The company has around Rs 173 crore loans on the books which would be reduced from the IPO proceeds, thereby reducing the interest liability in future.
"On comparing EV/Cash generation, the valuations of Barbeque Nation looks attractive. With healthy balance sheet, robust revenue growth and strong cash flow generations we believe the company can be looked from long term investment perspectives. Hence, we recommend 'subscribe' for long term," said the brokerage.
Barbeque Nation Hospitality is one of India's leading casual dining restaurant chains (in terms of outlet count as of September 2020). It also owns and operate Toscano Restaurants and UBQ by Barbeque Nation Restaurant.
The company has steadily grown its restaurant network from a single restaurant in 2008 to 147 Barbeque Nation Restaurants across 77 cities in India and six international Barbeque Nation Restaurants in three countries outside India as of December 2020.
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