Devyani International IPO: Issue subscribed 9.56 times on final day

The initial public offering (IPO) public issue of Devyani International, along with the operating channels of restaurants like KFC and Pizza Hut, is contiguously receiving a firm response on the issue subscribed at a rapid pace of 9.56 times on August 6, till the last day of bidding.

The grey market premium has been significantly increased at a gradual rate from Rs 15-20 last week to Rs 60-65. The initial public offering (IPO) public issue of Devyani International, along with the operating channels of restaurants like KFC and Pizza Hut, is contiguously receiving a firm response on the issue subscribed at a rapid pace of 9.56 times on August 6, till the last day of bidding. This bidding has granted a total of 107.56 crore equity shares compared to an IPO size of 11.25 crore equity shares and generating bids of Rs 9,680 crores.

Retail investors have surpassed the set targets by subscribing heavily by 28.27 times on the IPO. Here 3.39 times subscribed portion was kept aside for the employees. Additionally, the portion set aside for qualified institutional buyers was subscribed at the rate of 1.92 times and 12.23 times was left for the non-institutional investors.

Devyani operates an array of 696 stores (of KFC, Pizza Hut and Costa Coffee) across 166 major cities in India, as w.e.f., June 30, 2021.  “Devyani International’s strong portfolio of globally recognized brands, business and geographical diversification, strong presence across key consumption areas and increasing digital adoption provides a strong growth runway for the company. Although the company has been loss-making, it is on an expansion mode with strong industry triggers,” averred Ashika Stock Broking.

“Catering to the valuations on a high priced brand, Devyani International expects a market caps/ales of 9.54x according to the FY21 post-issue equity and enterprise value/sales of 9.55x, which is reasonably priced when compared to its listed industry peers”, said the brokerage.

“In 2021, quick-service restaurants are expected to witness a better recovery compared to other channels, owing to the better suitability for takeaways”, Ashika Stock Broking said.

Grey market premium

Devyani International shares traded at a whopping Rs 60-65 premium in the grey market, which gave rise to a trading price of Rs 150-155 with a profit of 66.7-72.2 per cent over the issue price of Rs 90 per share, as per the data displayed by the IPO Watch and IPO Central. It increased steadily at a premium of Rs 60-65, leading to store augmentation, growth in QSR, urbanization, higher economic potential and disposable incomes.

“The quick-service restaurant channel has been rapidly growing in popularity in India owing to factors such as a rise in literacy, exposure to media, increase in disposable incomes and easier and greater availability of QSRs,” said Ashika Stock Broking. “The value sales of quick-service restaurants are expected to grow at an even higher pace of 12.4 per cent. Economic recovery and greater investments from western fast-food chains are expected to drive the growth”, the brokerage added.

Source Money Control
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