Devyani International Limited had made its market debut earlier this week and closed its subscriptions on Friday. The quick-service restaurant (QSR) chain brand opened its Rs 1,838 crore initial public offering this week and saw a tremendous amount of engagement from its investors in terms of subscriptions. On day three of the public issue, the company received a strong response from investors who had subscribed to the issue a total of 116.70 times, as the subscription came to a close.
The issue was open for a total of three days on the public market and saw a good amount of response from eager investors. The non-institutional investors (NIIs) were the largest subscribers out of all the other investor segments. The NIIs subscribed to the IPO a total of 213.06 times over the three-day trading. The qualified institutional buyers (QIBs) and the retail investors for the IPO subscribed to the issue 95.27 times and 39.48 times respectively. There were also subscriptions from employees which stood at 4.70 times against their allotted shares.
The offer saw bids for 1,313.77 crore equity shares against its reduced IPO size of 11.25 crore equity shares. This generated bids of Rs 118,239.3 crore according to subscription data on the exchange. In terms of allotments for the investors, the QIBs were given a reservation of 75 per cent. The NII category received a reservation of 15 per cent and the retail investors received a 10 per cent.
In light of the issue coming to a close, the market’s attention has shifted to the next phase of the issue – the listing and allotments. The Devyani International IPO will most likely see its basis of allotment take place on August 11. The accreditation of shares to successful bidders will likely happen on August 13, while the refunds to the unlucky investors will be done a day prior – August 12. As far as listing goes, the company will probably list on August 16, but this is not confirmed as of yet.
The Devyani International IPO is a book-built issue and has an issue size of Rs 1,838 crore. The issue also consists of a fresh issue as well as an offer for sale (OFS). The fresh issue has a size of Rs 440 crore, while the OFS clocks in at Rs 1,398 crore with 155,333,330 equity shares with a Rs 1 face value per share. The price band for the IPO was listed as Rs 86 to Rs 90 per equity share. The objective of the public is was to garner funds for repayments and pre-payments on the company’s borrowings, which would be either partially or fully. The remainder was set to go towards general corporate expenses.
The grey market premium for Devyani International stood at Rs 65 on August 7 after the IPO came to a close the previous day. This indicated that the IPO was trading at a premium of Rs 151 to Rs 155 on the unlisted market. This was the same premium at which it was trading on the last day of the IPO.
With regards to the company’s financials, the KFC chain operator gains a 57 per cent to its topline from the KFC chain of restaurants. The segment has seen a revenue CAGR of 18 per cent in FY19-21 to Rs 644 crore. This number stands despite the difficulties and hurdles brought on by the pandemic. Speaking on the growth prospects of the company and its core business brands, ICICI Direct said in a note, “Both KFC (14-16%) & Pizza Hut (17-19%) had better per store EBITDA margins than McDonalds (13-15%) & Burger King (12 14%) though lower than Domino’s (21-23%) & Subway (20-22%) on an average as per data of FY20. Going forward, the company is expected to further improve these margins with the help of this ongoing transition strategy.”
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