Devyani International’s Rs 1,838 crore IPO has been underwritten 9.56 times so far on the last day of the sale, with all pockets of investors oversubscribing their share of the issue. The largest number of retail investors have subscribed to the IPO to date. Devyani International is the largest Yum brand franchisee in India and operates the KFC, Taco Bell and Pizza Hut brands under its banner, aligned with Costa Coffee. Devyani International’s IPO has been the subject of strong investor demand since it opened on Wednesday and was fully subscribed within three hours of the first day of the bidding process.
Devyani International’s IPO can be subscribed to by investors within the fixed price range of Rs 86-90 per share, in a batch of 165 shares. Out of the total 11.25 crore of shares offered, investors made offers for 107.5 crore of shares, or 9.56 times the size of the issue. Retail investors made an offer for 58.8 crore of shares or 28.87 times their quota. NIIs bid for 36.82 crore shares or 12.05 times the reserved portion, while Qualified Institutional Buyers (QIBs) took out their share of the issue 1.92 times, placing bids for 11.76 crore shares. The IPO is a mixture of an offer to sell (OFS) and a new issue of shares.
In the unlisted space, the shares of Devyani Internation were trading at a premium of Rs 65 per share, or 72% above the IPO price. Devyani International has continued to trade at a stable premium since the IPO opened for subscriptions, people working in the gray market said.
The company caters to an attractive industry that is expected to grow at 12% CAGR over the next five years. “QSR is expected to experience an increase in the number of transactions and the average transaction size due to the short duration of affordable service offered by QSR,” national research and brokerage firm ICICI Direct said in a note. “We believe that DIL would be able to capture growth through the metropolitan lifestyle and outdoor eating habits. This, along with the company’s cost-rationalization initiatives, will help increase profitability in the future, ”they added while pinning a“ Subscribe ”note to the IPO. The brokerage firm estimates that the IPO is priced at 7x price / sales (after issue) FY20 on the upper band.
After the IPO, the promoters of the company will hold 67.99% of the capital of the company while the public participation will increase to 32% against 24.2% currently. Devyani International also operates KFC and Pizza Hut stores in Nigeria and Nepal, giving it international exposure. Ventura Securities analysts have a “Subscribe” rating on the matter. “Our price target of Rs 149.8 (59.9X BPA FY24) represents a potential increase of 66.4% from the offer price of Rs 90 (upper band limit) over a period of 18-24 months, ”they said.