DEVYANI INTERNATIONAL IPO

IPO Details:

Price Band: 86-90

Cutoff Price: 90

About Company:

Devyani International is the largest franchisee of Yum Brands in India and are among the largest operators of chain quick service restaurants (“QSR”) in India, on a non-exclusive basis, and operate 655 stores across 155 cities in India, as of March 31, 2021, and 696 stores across 166 cities in India, as of June 30, 2021. Yum! Brands Inc. operates brands such as KFC, Pizza Hut and Taco Bell brands and has presence globally with more than 50,000 restaurants in over 150 countries, as of December 31, 2020. In addition, they are a franchisee for the Costa Coffee brand and stores in India. Devyani business is broadly classified into three verticals that include stores of KFC, Pizza Hut and Costa Coffee operated in India; stores operated outside India, primarily comprising KFC and Pizza Hut stores operated in Nepal and Nigeria (“International Business”); and certain other operations in the F&B industry, including stores of our own brands such as Vaango and Food Street (“Other Business”).

Competitive Strengths:

1. Portfolio of highly recognized global brands catering to a range of customer preferences;

2. Multi-dimensional comprehensive QSR player;

3. Presence across key consumption markets with a cluster-based approach;

4. Cross brand synergies with operating leverage;

5. Disciplined financial approach with focus on cash flows and returns;

6. Distinguished Board and experienced senior management team.

Strategies:

1. Strategically expand store network of Core Brands Business;

2. Continue to improve unit-level performance;

3. Focus on delivery channel for Core Brands;

4. Invest in technology and focus on our digital capabilities.

Financial Performance:

Company's Revenue has decreased in FY 21 because of pandemic. Company is not in profit and burning cash for years and also EPS is negative.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Repayment/Prepayment of borrowing

Competitors Comparison:

Devyani International is in loss and P/B value is 87, which is overvalued in that industry. Except Jubilant Food, both the companies are in loss. So doing competitors comparison won't be of any use.

Grey Market Premium:

Our view: GMP of the IPO is decent and also the price is overvalued after comparing it with listed competitors. We can expect this IPO to list at premium and hence I would be applying for this IPO for listing gains.

Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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