Devyani International Limited is all set to enter the market on Monday. The largest franchisee of Pizza Hut, KFC and Costa Coffee in India will get listed at National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) at 10 am on August 16. The initial public offer (IPO) of Devyani International received a stellar response from the investors when it had opened for subscription earlier this month. The Rs 1,838-crore public issue was booked a whopping 116.71 times. Investors put a bid over 1,313.79 crore shares against the total issue size of over 11.25 crore, according to the data available at the stock exchange.
The portion reserved for the Qualified Institutional Investors’ was booked 95.25 times. The non-institutional investors quota was booked 213.06 times, and the portion set aside for retail investors witnessed 39.52 times subscription. The strong response from the investors and the positive sentiment in the market indicated a decent listing for the share on Monday. Devyani International share is expected to list around Rs 145-147, over 63 per cent premium over the higher end of the issue issue price of Rs 86-90 per share.
“Devyani International IPO is going to list on exchange on 16 august 2021. Devyani International has received strong response from investors and oversubscribed around 116.7x times. We expect strong listing gain on back of lower EV/Sales (FY21) valuation which is 9.9x compared to peers (Jubilant Foodworks-15.4x, Burger King India -14.8x, Westlife Development – 10x). Moreover, Devyani International has a better operating margin compared to Westlife Development & Burger king,” said Amarjeet Maurya – AVP – mid caps, Angel Broking Ltd.
Ahead of the listing, Devyani International stock was trading at Rs 55-57 in the unofficial market. The grey market premium of Devyani International was commanding a price of Rs 145-147, around 60 per cent up over the issue price. The high grey market premium of Devyani International share referred a healthy listing of stock on the BSE and NSE on Monday.
The quick service restaurants (QSR) operator aims to raise Rs 1,838 crore. It comprised a fresh issue of equity shares worth Rs 440 crore and an offer-for-sale (OFS) worth Rs 1,398 crore by the promoter and existing shareholder.
“Devyani International is among the earliest and largest operators of
quick service restaurants (QSRs) in India. The company is the largest
franchisee of Yum brands in India and operates brands KFC & Pizza Hut
under its banner. The segment has recorded strong revenue CAGR of ~18% in FY19- 21 to Rs 644 crore, despite pandemic led disruption. The segment’s gross profit also increased at a CAGR of 19% and recorded one of its best gross profit margin (of 68%) in FY21,” ICICI Direct Research said in a report.
“In addition, DIL is also a franchisee of Costa Coffee in India. Core brands (KFC, Pizza Hut and Costa Coffee) contribute 94% to its topline while the rest comes from international operations and other business (own brand such as Vaango & Food Street). The core brands store counts grew at a CAGR of 14% in the last two years to 605 stores by March 2021. The company is looking to expand its core brands in existing and new cities as the QSR industry is likely to grow at 12% CAGR over the next five years (higher than historical CAGR of 5.5%), supported by rising urbanisation and per capita income,” it further mentioned.
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