Devyani International's Rs 1,838-crore initial public offering (IPO) opens for subscription today i.e. August 4. The IPO will close on August 6. Ahead of the IPO, the fast-food chain operator raised Rs 825 crore from anchor investors, including Abu Dhabi, Aditya Birla Sun Life, Ashoka India and Goldman Sachs. Devyani International shares are likely to be listed on the bourses on August 4. (Here's all you need to know about the IPO: https://www.ndtv.com/business/devyani-internationals-ipo-all-set-to-open-on-august-4-2021-find-out-details-here-2501403)
The primary market offer comprises a fresh issue of Rs 440 crore and an offer for sale of Rs 1,398 crore by existing investors. Investors can bid for a minimum one lot of 165 shares and in multiples thereof, extending up to 13 lots. The IPO proceeds will be utilised to retire debt and for general corporate purposes.
Incorporated in 1991, Devyani International is the largest franchisee of Yum Brands in India, operating quick service restaurant (QSR) brands such as Pizza Hut and KFC. It runs 297 Pizza Hut stores, 264 KFC stores and 44 Costa Coffee across India. Devyani International's listed peers include Jubilant FoodWorks, Westlife Development and Burger King India.
Three other IPOs viz. Windlas Biotech, Exxaro Tiles and Krsnaa Diagnostics are opening today.
Kotak Mahindra Capital Company, CLSA India, Edelweiss Financial Services and Motilal Oswal Investment Advisors are the merchant bankers to the IPO.
Should you invest in the IPO of Devyani International. Here's what brokerages suggest
"In terms of valuations, the post-issue FY2021 EV/Sales works out -9.9x to (at the upper end of the issue price band), which is low compared to peers (Jubilant Foodworks-15.4x, Burger King India -14.8x, Westlife Development – 10x). Further, Devyani International has a better operating margin compared to Westlife Development & Burger king," Angel Broking said in a note to its investors.
"We believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue," Angel Broking added.
"At the upper end of the IPO price band, Devyani International is offered at 9.5x market capitalization / sales as per FY21 financial statement, compared to peers such as Jubilant Foodworks (15x), Westlife Development (8.8x), Burger King India (14x). We believe the company remains well placed for long term growth considering the company's portfolio of recognized global brands catering to a range of customer preferences, cross brand synergies, expansion of store network and EBITDA positive earnings," Anand Rathi said in a note to its investors.
we give this IPO a "Subscribe" rating, Anand Rathi added.