Barbeque-Nation Hospitality Ltd. IPO

IPO Details:

Price Band: 498-500

Cutoff Price: 500

About Company:

They own and operate Barbeque Nation Restaurants, one of India’s leading casual dining restaurant chains (in terms of outlet count as of September 30, 2020) according to the Technopak Report, and International Barbeque Nation Restaurants. They also own and operate Toscano Restaurants and UBQ by Barbeque Nation Restaurant. The first Barbeque Nation Restaurant was launched in 2006 by SHL, one of the Promoters. First Barbeque Nation Restaurant was launched in 2008 and subsequently acquired five Barbeque Nation Restaurants owned by SHL in 2012. Company have steadily grown our owned and operated Barbeque Nation Restaurant network from a single restaurant in 2008 to 147 Barbeque Nation Restaurants across 77 cities in India and six International Barbeque Nation Restaurants in three countries outside India as of December 31, 2020.

Competitive Strengths:

1. Barbeque Nation is one of India’s fastest growing and widely recognised restaurant brands in the rapidly growing CDR market

2. Steady growth in covers and consistent APC with a relatively high proportion of total revenues from weekday sales and lunch covers

3. Attractive offerings based on constant menu innovation and customer focus

4. Strong business processes and back-end systems leading to efficient operations

5. Experienced staff and value-oriented business culture led by some Promoters and the senior management team bringing experience from well-known hospitality brands

6. Proven track record of revenue growth.

Strategies:

1. Increase same store sales growth, revenue per store and profitability as the vintage of our Barbeque Nation Restaurants increases

2. Continue expansion in Indian cities

3. Preserve customer and team-focused culture and values

4. Expansion through owned & franchise formats in select international markets

5. Continue evaluating strategic brand acquisitions.

Financial Performance:

Company revenue is positive but they are not able generate net profit from the business in last 3 years. Company is burning cash and have negative net profit and earning per share.

Objects of the Issue: Offer for Sale

Competitors Comparison:

Earnings of the competitors are also negative so best way to compare the valuation is through Price to Book Value. P/BV of Barbeque is high compared to its competitors, and it is overvalued at current IPO Price.

Our view: Barbeque Nation IPO seems to overvalued as of now. I am avoiding this IPO.

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