The initial public offering of Sapphire Foods, YUM’s largest franchisee operator in the Indian subcontinent in terms of revenues for FY20, has subscribed 6.62 times on November 11, the final day of bidding, garnering bids for 6.39 crore equity shares against offer size of 96.63 lakh equity shares.
Qualified institutional buyers have bought 7.5 times of the shares set aside for them, while the reserved part of non-institutional investors was subscribed 3.46 times.
Retail investors have put in bids 8.7 times the portion reserved for them.
The Rs 2,073 crore initial public offering was subscribed 1.07 times till the second day of bidding on November 10. The offer was opened for subscription on November 9.
It is entirely an offer for sale issue, so the company will not get any money from the public issue. All the money, excluding issue expenses, will go to selling shareholders including promoters and investors.
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As of March 31, 2021, Sapphire Foods owned and operated 204 KFC restaurants in India and the Maldives, 231 Pizza Hut restaurants in India, Sri Lanka and the Maldives, and two Taco Bell restaurants in Sri Lanka.
In CY20, YUM brands KFC, Pizza Hut and Taco Bell recorded worldwide sales of $26.2 billion, $11.9 billion and $11.7 billion, respectively. Collectively their worldwide sales are highest amongst QSR (quick service restaurant) segment in food consumption sector. These brands are well known globally for their taste and hygiene factors.
Also read Moneycontrol's Exclusive Research Note on Sapphire Foods IPO
"QSR companies are currently trading at market cap to sales ratio ranging from 8.9x for Westlife Development to 15.5x for Devyani International, the average sector multiple is 13.1x. Sapphire Foods IPO is decently priced, it’s offered at market cap to sales ratio of 6.78x to its FY21 sales. Pricing becomes more lucrative considering the fact that during FY21 sales got impacted due to Covid related lockdown and protocols," said KRChoksey Research.
The brokerage recommended subscribe to the issue for both listing gains as well as long term wealth creation.
Also read - KFC operator Sapphire Foods floats its IPO. Should you subscribe?
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