• Wed. Aug 10th, 2022

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Devyani International IPO filled full, IPO size reduced

Aug 4, 2021
Image courtesy Moneycontrol

The initial public offering (IPO) of KFC, Pizza Hut and Costa Coffee operator Devyani international has been fully subscribed on August 4, the first day of bidding.

The offer has received bids for 11.27 crore equity shares against the IPO size of 11.25 crore equity shares, the subscription data available on exchanges showed. The IPO size has been reduced to 11.25 crore equity shares from 20.42 crore equity shares after the company raised Rs 824.87 crore from anchor investors on August 3.

The retail investors remained at the forefront as their reserved portion was subscribed 5.36 times and that of employees 30 percent.

The portion set aside for non-institutional investors has seen a subscription of 11 percent and qualified institutional buyers have put in bids for 1.1 lakh equity shares against their reserved portion of 6.11 crore equity shares.

The company is planning to raise Rs 1,838 crore from the public issue which comprises a fresh issue of Rs 440 crore and an offer for sale of Rs 1,398 crore by existing selling shareholders.

The price band for the offer has been fixed at Rs 86-90 per share. The issue will close on August 6.

We believe Devyani International would be able to capture the growth owing to metro lifestyle and outside food habits. This, coupled with the company’s cost rationalisation initiatives will help drive profitability in future,” said ICICI Direct which recommended subscribe to the issue.

Devyani International is among the earliest and largest operators of quick service restaurants (QSRs) in India. The company is the largest franchisee of Yum brands in India and operates brands KFC & Pizza Hut under its banner. In addition, it is also a franchisee of Costa Coffee in India.

Its Core brands (KFC, Pizza Hut and Costa Coffee) contributed around 94 percent to its topline in FY21 while the rest comes from international operations and other business (own brand such as Vaango & Food Street).

Its store count reached 645 by June 2021 as the company continued its focus on adding core brand stores amid pandemic.

The company is looking to expand its core brands in existing and new cities as the QSR industry is likely to grow at around 12 percent CAGR over the next five years (higher than historical CAGR of 5.5 percent), supported by rising urbanisation and per capita income, said ICICI Direct.

The KFC and Pizza Hut operator’s shares traded at a premium of Rs 50-55 in the grey market ahead of its issue, the IPO Watch and IPO Central data showed. As a result, the trading price comes to Rs 140-145, higher by 55.6-61.1 percent over upper issue price band of Rs 90.

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