KFC and Pizza Hut quick service restaurant chain operator Devyani International shares traded at more than 55 percent premium and diagnostic services provider Krsnaa Diagnostics shares were available at over 30 percent premium in the grey market on August 14, ahead of listing next week.
Both the companies launched their initial public offerings on August 4 and closed on August 6 on a strong note with stellar subscription demand. Both will make a debut on the bourses on August 16.
The largest franchisee of Yum Brands in India has raised Rs 1,838 crore through public issue that was subscribed 116.71 times driven by strong response from all kind of investors considering growth potential with high returns and attractive valuations.
The reserved portion of qualified institutional buyers was subscribed 95.27 times and that of non-institutional investors subscribed 213.06 times, while the portion set aside for retail investors witnessed 39.52 times subscription and employees 4.7 times.
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Investors in the grey market traded Devyani's shares at a premium of Rs 50-55, the IPO Watch and IPO Central data showed.
This resulted into a trading price of Rs 140-145 per share, which is 55.6-61.1 percent higher over the final issue price of Rs 90.
"The grey market premium is quite justified, with the past few IPOs hitting the exchanges with stellar listing gains. It is only natural for investors to be so optimistic. The quick service restaurant (QSR) business model has a huge potential in the country with growing working population changing tastes and preferences of the consumers," said Gaurav Garg, Head of Reserach at CapitalVia Global Research.
The initial public offering comprised a fresh issue of Rs 440 crore, and an offer for sale of Rs 1,398 crore by investor Dunearn Investments and promoter RJ Corp. The net proceeds from fresh issue will be utilised for repaying of debts (Rs 324 crore).
Devyani International is among the largest operators of chain quick service restaurants in India, on a non-exclusive basis, and operates 696 stores across 166 cities in India, as of June 2021. Yum! Brands Inc. operates brands such as KFC, Pizza Hut and Taco Bell brands and has presence globally with more than 50,000 restaurants in over 150 countries, as of December 2020.
In addition, it is a franchisee for the Costa Coffee brand and stores in India.
Technology-enabled diagnostic services provider Krsnaa Diagnostics shares were available at Rs 1,254-1,274 per share, a premium of Rs Rs 300-320 or 31.4-33.5 percent over final issue price of Rs 954, the IPO Watch and IPO Central data showed.
"This issue has backing of strong sentiments due to its country wide presence and network and the business model," said Gaurav Garg.
The Rs 1,213.33-crore public issue had seen a massive subscription of 64.40 times as the qualified institutional buyers had put in bids 49.83 times their reserved portion, non-institutional investors 116.30 times and a part set aside for retail investors was subscribed 42.04 times. Employees' portion was subscribed 98 percent.
The IPO comprised a fresh issue of Rs 400 and an offer for sale of Rs 813.33 crore by selling shareholders, including PHI Capital Trust, Kitara, and Somerset Indus Healthcare Fund.
With fresh issue proceeds, the company will establish diagnostics centres in Punjab, Karnataka, Himachal Pradesh and Maharashtra, and repaying of debts.
Krsnaa Diagnostics has an extensive network of integrated diagnostic centres across India primarily in non-metro and lower-tier cities and towns, with operating 1,823 diagnostic centres offering radiology and pathology services in 13 states across India as of June 2021. The company focuses on the public-private partnership (PPP) diagnostics segment and has the largest presence in the diagnostic PPP segment.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.