Updated: March 24, 2021 12:37:21 pm
Barbeque Nation IPO: The initial public offering (IPO) of Barbeque-Nation Hospitality opened for subscription earlier in the day and will be available for subscription till Friday, March 26, 2021. The IPO has a price band of Rs 498-500 per share.
Ahead of its Rs 453 crore IPO, Barbeque Nation raised nearly Rs 203 crore (Rs 2,02,89,30,500.00) from 21 anchor investors in lieu of 40,57,861 equity shares at Rs 500 each, data from the stock exchanges showed.
The anchor investors include the likes of Goldman Sachs India, Fidelity Investment Trust, ICICI Prudential Mutual Fund and HDFC Life Insurance Company among others.
Barbeque-Nation Hospitality is a casual dining chain company that is backed by private equity investor CX Partners and ace investor Rakesh Jhunjhunwala’s firm Alchemy Capital.
The Barbeque Nation IPO comprises a fresh issue of shares worth Rs 180 crore and an offer-for-sale (OFS) of 54,57,470 equity shares. The proceeds of the issue will be utilised to fund the company’s capital expenditure for expansion and opening of new restaurants, prepayment or repayment of certain borrowings and for general corporate purposes.
The OFS route includes selling of 10,18,288 shares by Sayaji Housekeeping Services (SHKSL), 3,39,430 shares by Azhar Dhanani, 3,39,430 shares by Sadiya Dhanani, 3,39,430 shares by Sanya Dhanani, 33,23,106 shares by Tamara Private Limited (TPL), 71,186 shares by AAJV Investment Trust (AAJVIT) and 26,600 shares by Menu Private Limited (MPL), the data given on the red herring prospectus available on the National Stock Exchange (NSE) showed.
Investors who wish to subscribe to Barbeque Nation IPO can bid in the lot of 30 equity shares and multiples thereof. At the upper price band, they will have to shell out Rs 15,000 to get a single lot of Barbeque-Nation Hospitality. The shares will be listed on both BSE and National Stock Exchange (NSE).
Barbeque Nation Hospitality had filed preliminary papers in February last year, received Sebi’s approval in July 2020 to float the IPO.
As of December 2020, Barbeque Nation Hospitality operated 147 outlets across India and six outlets across three countries — UAE, Oman and Malaysia.
Axis Capital, IIFL Securities, Ambit Capital and SBI Capital Markets are the book running lead managers to the IPO while Link Intime India is the registrar of the issue.
Most of the research teams at various brokerages have not rated the issue however Prabhudas Lilladher in its IPO note has recommended “Subscribe” to the offer. YES Securities on the other hand has advised avoiding the IPO.
Prabhudas Lilladher in its IPO note said, “We assign subscribe rating to the IPO of Barbeque Nation (listing gains), one of the fastest growing Casual Dining Restaurant chain in India. The company has several growth levers such 1) Huge scope of expansion given low penetration 2) Expansion of Delivery business which has already grown from 3 per cent of Revenues pre covid to 15 per cent of Revenues in Nov20. 3) Strong value proposition with niche positioning in high growth casual dining segment. Negative working capital and Rs3.3bn funding (including pre IPO) bodes well for a turnaround and steady growth with an estimated 20 restaurant addition/year.”
It further noted that, “However little scalability of international operations (6 stores) and not so impressive track record of promoter group in scaling up Sayaji Hotels (loss in 5 out of last 10 years), promoter pledge (Rs246mn), insolvency proceedings and OFS by promoters in IPO (2.03mn shares), merit caution. We believe the company is valued cheaply at 1.4x FY23 EV/Sales however the stock at ~46xFY23EPS offers limited upside. Although we expect reasonable listing gains given IPO euphoria in the markets, the operational delivery needs to improve significantly for any serious re-rating in the long term.”
YES Securities in its IPO note stated, “Company is targeting a market cap of Rs 18.8bn post-issue which equates to 12.2x FY20 EV/EBITDA and 2.2x P/S, which is significantly lesser than QSR peers like Westlife and Burger King. But given the highly capital intensive and more volatile dine-in business model, we believe the discount is justified. Moreover, given the recent pre-IPO allotment in December and January was done at 50 per cent less than IPO price and COVID concerns have again come back which would be a near term headwind for the space, the pricing looks on the higher side with not a lot left on the table for investors. We also note that earlier fund raises in 2018 have been done at a much higher price, but fundamentals have deteriorated since. Despite a strong growth outlook for the space (18 per cent expected industry CAGR) and strong brand equity for the company which should help market share gains, we would advise avoiding the IPO and awaiting better entry opportunities post listing.”
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