Devyani International Ltd IPO details – Date, Price, Size, Allotment Status, Subscription

IPO-Note	Devyani International Limited
Rs-86-Rs90per Equity share	Recommendation: Listing Gain

 

Company Profile: –

Devyani International Limited is the largest franchisee of Yum Brands in India and is amongthe largest chain operators of quick service restaurants (“QSR”) in India on a non-exclusive basis.Yum! Brands Inc. operates brands such as KFC, Pizza Hut and Taco Bell and has presence globally with more than 50,000 restaurants in over 150 countries, as of December 31, 2020. It operates 3 business verticals; 1. Core Brands (KFC, Pizza Hut, and Costa Coffee stores in India), 2. International Business (stores in foreign countries i.e. Nepal and Nigeria), and 3. Other Businesses (own branded stores i.e. Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar). DIL operated 284 KFC stores and 317 Pizza Hut stores and 44 Costa Coffee stores in India as of June 30, 2021.

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Issue Details
Objects of the issue	·    Repayment/prepayment of all or certain of the borrowings ·    General corporate purposes.
Issue Size	Total issue Size -Rs. 1838Cr. Offer for Sale – Rs. 1398Cr. Fresh Issue – Rs. 440 Cr
Face value	Rs.1.00 Per Equity Share
Issue Price	Rs. 86 – Rs. 90
Bid Lot	165 shares
Listing at	BSE, NSE
Issue Opens:	4thAug, 2021 – 6th Aug, 2021
QIB	75% of Net Issue Offer
Retail	10% of Net Issue Offer
NIB	15% of Net Issue Offer

Financial Performance:

 

 

Shareholding Pattern:

Shareholding Pattern	Pre- Issue	Post Issue
Promoters & Promoter Group	75.79%	67.99%
Public	24.21%	32.01%

Strengths:

• The product portfolio of well-recognized QSR brands.
• Largest franchisee of Yum Brands in India.
• Disciplined financial approach with a strong focus on cash flow management.
• Cross brand synergies provide operating leverage benefits.

Key Highlights:

• Revenue from Operations increased 15.7% from FY19 to FY20 however declined25% from FY20 to FY21 due to the COVID impact.
• EBITDA Margin was 20% in FY21 vs 16.9% in FY20
• Reported losses in FY19-FY21 Primarily due to increased finance cost and depreciation and amortization expenses.
• Revenue from the Core Brands Business, together with their International Business, represented 94.19% of revenue in 2021.
• KFC and Pizza Hut represent 67.6% and 22.3% respectively of core brands business revenue.
• Has Low Current Ratioof 0.4 in FY21, CFO/EBITDA was 1.06 in FY21.

Risk Factors:

• The impact of the pandemic including its effect on the ability or desire of customers to dine in stores, is uncertain and may be significant and continue to have an adverse effect business of the company.
• The company had incurred losses in FY19-21 and these sustained losses have resulted from high corporate level overhead costs and towards funding certain loss-making businesses, such as operations at airports in India.These losses can continue in the foreseeable future.

Outlook:

Devyani International is the largest franchisee of Yum Brands and operates brands such as KFC, Pizza Hut and Taco Bell.The KFC brand has been a star performer in terms of store growth, with its store network growing from 134 in FY19 to 264 in FY21.The company has extensive presence in 26 states and three Union territories in India as of March 31, 2021.Given the covid-19 pandemic, the company anticipates considerable growth in the delivery business. Revenue generated from delivery sales represented 51.15% of total revenue in core Brands Business in FY20, which increased to 70.20% of total revenue in FY 2021.In the last six months, despite covid-19, the company opened 109 stores across its core brand business.The company has plans to further increase its reach by opening more stores in locations with high potential.At the higher price band of Rs 90, the offer is made at EV/Sales of 10.06 times on Post Issue equity basis. Listed industry peersof the company are Jubilant FoodWorks,which trades at 15.26 times its FY21 EV/Sales, Burger King trades at 15.04 times and WestlifeDevelopment at 9.91 times. We recommend Listing Gain to the IPO.

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