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Devyani International IPO shares list at Rs 141- a 56% premium over issue price

Devyani International IPO: Rs 1,838-crore issue opened for subscription on August 4 and closed on August 6 with a stellar subscription of 116.71 times

August 16, 2021 / 10:16 AM IST
 
 
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KFC, Pizza Hut and Costa Coffee operator Devyani International shares made a bumper debut on August 16 as the stock listed with a 56 percent premium on the bourses.

It opened at Rs 141 on the BSE and Rs 140.90 on the National Stock Exchange, against issue price of Rs 90 per share.

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The company launched its Rs 1,838-crore initial public offering for subscription on August 4 and closed on August 6 with a stellar subscription of 116.71 times, generating bids for 1,313.79 crore equity shares against offer size of 11.25 crore equity shares.

The portion set aside for qualified institutional investors was subscribed 95.25 times, and non-institutional investors’ part was subscribed 213.06 times, while retail investors portion was booked 39.52 times and employees bought 4.7 times their reserved portion.

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The offer had 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 company will repay its debts through fresh issue proceeds, besides use for general corporate purposes.

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All the brokerages had a subscribe rating to the public issue of Devyani International, the largest franchisee of Yum Brands in India and also among the largest operators of chain quick-service restaurants (QSR) in India on a non-exclusive basis. The company operates 696 stores across 166 cities in India as of June 2021.

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"Its strong portfolio of globally recognized brands, business and geographical diversification, strong presence across key consumption areas and increasing digital adoption provides a strong growth runway for the company. Although the company has been loss making, but it is on a footprint expansion mode with strong industry triggers," said BP Equities.

Considering the expected improvement in financial performance and future growth drivers, the brokerage has given a 'subscribe' rating for the long term.

Reliance Securities also recommended a subscribe to the issue. "The IPO is valued at 62.8x of FY21 EV/EBITDA and 9.9x of FY21 EV/Sales, which look to be reasonable compared to its listed QSR peers and Westlife Development (McDonald’s) and Burger King," said the brokerage.

The brokerage further said, "Fast food culture under QSR is expected to flourish in India due to increase in working class population and continued urbanization. We note that business model of QSR is quite impressive, as each restaurant franchise starts generating significant return on equity at restaurant level once it reaches utilization level of more than 90 percent, which bodes well for the long-term investors."

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.
Moneycontrol News
first published: Aug 16, 2021 10:00 am

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