KFC & Pizza Hut operator Devyani International is predicted to form a stellar debut on bourses on August 16 with most analysts expecting quite 50 percent listing gains.
The Rs 1,838-crore public issue was oversubscribed by 116.71 times during April 4-6. Qualified institutional investors’ reserved portion was subscribed 95.25 times, non-institutional investors part was subscribed 213.06 times, and therefore the portion put aside for retail investors witnessed 39.52 times subscription. Employees’ portion was subscribed 4.7 times.
The offer comprised a fresh issue of Rs 440 crore and a suggestion purchasable of Rs 1,398 crore by investor Dunearn Investments and promoter RJ Corp.
“Considering excellent demand from for QSR story in India, we expect strong listing above Rs 135, which translates to quite 50 percent premium over the upper end of the IPO price Rs 90,” Prashanth Tapse, VP Research at Mehta Equities told Moneycontrol.
“Premium listing gains seem to be justified because the issue was well priced with attractive valuation and well-diversified global brands (KFC, Pizza Hut, Costa Coffee & Yum) are strongly placed across all age groups which provides future demand visibility,” Tapse said Gaurav Garg, Head of Research at CapitalVia Global Research expects listing to be around Rs 145-150.
Devyani International is that the largest franchisee of Yum Brands in India and is among the most important operator of quick-service restaurant (QSR) chains with 696 stores across 166 cities.
Yum Brands Inc. operates brands like KFC, Pizza Hut and Taco Bell and features a presence globally with quite 50,000 restaurants in over 150 countries. additionally , the corporate is additionally a franchisee for the Costa Coffee brand and stores in India.
Currently, the Costa Coffee chain operator’s shares are trading at Rs 145 within the grey market, a premium of Rs 55 or 61.1 percent over the ultimate issue price of Rs 90 per share, the IPO Watch and IPO Central data showed.
“The grey market premium is sort of justified. With the past few IPOs hitting the exchanges with stellar listing gains it’s only natural for investors to be so optimistic. The QSR business model features a huge potential within the country with a growing working population, changing tastes and preferences of the consumers,” said Gaurav Garg said.
“The company is valued at 9.54 times on price/sales front which is sort of reasonable in comparison to its peers and therefore the IPO is valued at around 62.8 times EV/EBITDA (enterprise value – earnings before interest, tax, depreciation and amortisation) which looks reasonable when looked along side its peers. the expansion potential of this industry is sort of high once it can operate at full capacity and is predicted to get good return on equity.” he added.nce it can operate at full capacity and is predicted to get good return on equity.” he added.
Amarjeet Maurya – AVP – Mid Caps at Angel Broking also expects strong listing gain on the rear 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).