The Barbeque Nation Hospitality preliminary public providing (IPO) opened for subscription on Wednesday. The firm’s public providing will shut on March 26.
The main informal eating restaurant chain plans to lift Rs 452.87 crore from the general public providing. The worth band for the IPO has been fastened at Rs 498-500 per share. It could also be famous that the corporate has already raised Rs 202.89 crore from 15 anchor buyers.
The Barbeque Nation Hospitality public concern contains contemporary issuance of Rs 180 crore and an offer-for-sale (OFS) of Rs 272.87 crore, comprising over 54 lakh shares. The eating chain plans to make use of the proceeds from the IPO in direction of ongoing restaurant enlargement and for repaying present money owed.
Additionally, shares as much as Rs 2 crore will likely be reserved for eligible workers. According to reviews, the response obtained by the BBQ IPO on the gray market has been weak.
The motive behind the nervousness is as a result of disaster confronted by the restaurant sector in the course of the peak of the Covid-19 pandemic.
What consultants say about BBQ IPO
A lot of brokerages have suggested in opposition to subscribing to the problem or have maintained a impartial stance. While Barbeque Nation is one in all India’s fastest-growing restaurant manufacturers, there are some issues which were listed by brokerages.
According to a word ready by Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd, the outbreak of the Covid-19 pandemic is one concern for the restaurant chain in the intervening time.
“The outbreak of COVID-19 pandemic, as well as GoI measures to reduce the spread of, have had a substantial impact on restaurant operations,” Roy talked about within the word.
Roy additionally stated that there was a deterioration within the efficiency of the corporate and enterprise could also be adversely impacted because of it. He additionally stated that the failure to implement a development technique might affect the eating chain’s enterprise going ahead.
“Deterioration in the performance of, or relationships with, third-party delivery aggregators, may adversely affect business. Failure in implementing growth strategy including in relation to selecting cities and locations for new restaurants etc,” he added.
Commenting on the valuation, he stated, “While the company has posted revenue growth of 20 per cent CAGR between FY18-FY20, it has been continuously incurring losses at PAT level despite topline growth. The Covid-19 pandemic too has had an adverse impact on the operations of the company hence we expect profits will remain under pressure over the medium term. At the higher end of the price band, the company is asking for a valuation of 2.4x FY20 EV/Sales which we believe is expensive given the current environment.”
“Hence we recommend a ‘Neutral’ rating to the IPO,” he added.
Meanwhile, Yes Securities talked about some issues concerning the IPO’s excessive pricing. It has requested buyers to not subscribe to the IPO and wait until the itemizing is completed.
“Given the recent pre-IPO allotment in December and January was done at a price 50 per cent less than the IPO price and the fact that Covid concerns would be a near-term headwind for the space, the pricing looks on the higher side,” Yes Securities stated.
Reliance Securities and Prabhudas Lilladhar are two brokerage corporations which have given the Barbeque Nation Hospitality IPO a ‘subscribe’ score however have cited efficiency issues as a result of affect of the Covid-19 pandemic. Both the brokerages broadly indicated that the corporate wants to enhance its efficiency for higher valuation in future.
It is price mentioning that as of 2020, Barbeque Nation Hospitality operated 147 eating places throughout 77 cities in India and 6 worldwide eating places throughout three international locations particularly UAE, Oman and Malaysia
(Disclaimer: All funding suggestions talked about on this article relies on info obtained from consultants at brokerage corporations. The views expressed by brokerage agency consultants are their very own and never that of IndiaImmediately.in or its administration. Investors ought to verify with licensed consultants earlier than investing within the concern.)