Should you invest in Devyani International Limited IPO?

Devyani International Limited incorporated in 1991, is the largest franchisee of Yum Brands in India and is among the largest operators of chain quick service restaurants (“QSR”) in India. 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).

Get your financial plan done by a Registered Investment Advisor. Its FREE, but spots are limited. . Register now

It operates brands such as KFC, Pizza Hut and Taco Bell brands and operates through 696 stores across 166 cities in India, as of June 30, 2021. It operated 284 KFC stores and 317 Pizza Hut stores in India as of June 30, 2021.

Promoters & Shareholding:

Ravi Kant Jaipuria, Varun Jaipuria, and RJ Corp Limited are the company promoter with pre issue holding of 75.79%.

Also read : How to identify a good IPO?

Public Issue Details:

Offer for sale: Fresh issue of approx. 48,888,889 equity shares of Rs. 1 aggregating up to Rs. 1,398 Cr and OFS of approx. 155,333,330 equity shares aggregating up to Rs. 440 Cr.

Total IPO Size: Rs. 1,838 Cr.

Price band: Rs. 86 – Rs. 90.

Objective: For repayment and/or prepayment of company’s borrowings fully or partially and for general corporate purposes.

Bid qty: minimum of 165 shares (1 lot) for Rs. 14,850and maximum of 13 lots.

Offer period: 4th Aug 2021 – 6th Aug 2021.

Date of listing: 16th Aug 2021.

Get your Mutual funds and Equity portfolio evaluated by a Registered Investment Advisor. Its FREE, but spots are limited. . Register now

Pros:

  • Largest franchisee of Yum Brands in India.
  • Cross brand synergies with operating leverage.
  • Professional and experienced management team.
  • Strong store network; 264 KFC Stores, 297 Pizza Hut stores, and 44 Costa coffee store
  • Multi-dimensional comprehensive QSR player.

Cons:

  • Covid-19 lockdowns has had/will have significant impact on the company’s business.
  • The company rely on its arrangements with Yum for KFC and Pizza Hut stores that comprise a significant majority of its business.
  • Incurred losses in the last 3 financial years.

Also read : 5 Mutual Fund Investment Mistakes you can Avoid

Subscribe or avoid?

The Indian food services sector generated a total revenue of $117.5 billion in 2020 and is expected to grow by an even higher rate of 6.9% in the period between 2020 and 2025; In 2020, the QSR channel made the largest contribution to the foodservice industry, with a sales share of 34.1% and it is expected to further grow at a CAGR of 6.5% which will have positive impact on the company and its business.

On the financial side, the company has reported revenue of Rs. 1,198.89 Cr, Rs. 1,535.04 Cr and Rs. 1,323.68 Cr in the FY21, FY20 and FY19 respectively and net loss of Rs. – (81.32) Cr, Rs. – (78.75) Cr and Rs. – (59.29) Cr in the FY21, FY20 and FY19 respectively. The average annual revenue growth from the last 3 years has been around -3%.

For the last 3 years average EPS is around Rs -0.61. We cannot compute P/E as company has been incurring losses in the last 3 years. Its listed peers are Jubilant FoodWorks Limited, Westlife Development Limited, and Burger King India Limited. Due to current bull run, such IPOs may provide some gains on listing day and in short term. However, investors looking for medium to long term investment need to wait and watch company performance for some more time. Considering all the above factors we recommend “Avoid” this IPO.

Get your financial plan done by a Registered Investment Advisor. Its FREE, but spots are limited. . Register now

Disclaimer:

This article should not be construed as an investment advise, please consult your Investment Adviser before making any investment decision.

myMoneySage.in is an award winning personal finance platform. It helps you aggregate all your personal finance accounts like FD, Equity, Mutual Funds, PPF EPF, NPS including, Credit Cards & Loans etc. It's one place where you can track, plan and invest seamlessly. myMoneySage.in empowers you to invest in zero commission direct plans of mutual funds thereby helping you generate higher on investments. The best part is it comes with a lifetime Free plan.


Switch to direct mutual funds in 3 simple steps, earn 30% more return on your investments. Register to get a FREE myMoneySage account.

You may also like...

>
error: Content is protected !!