Barbeque Nation IPO: The promoters maintain 60.24 per cent stake, CX Partners owns 33.79 per cent and Rakesh Jhunjhunwala’s funding agency Alchemy Capital holds 2.05 per cent in the corporate.
The Rs 453-crore preliminary public providing (IPO) of informal eating chain Barbeque Nation Hospitality opened for subscription on Wednesday.
The IPO includes recent fairness value Rs 180 crore and secondary share sale value Rs 273 crore.
The worth band for the IPO is ready at Rs 498-Rs 500 per share. The challenge will shut on March 26.
Proceeds of the recent challenge will likely be utilised to fund the corporate’s capital expenditure for enlargement, in addition to prepayment or compensation of sure borrowings and bills associated to normal company functions.
About the corporate
Barbeque Nation Hospitality owns and operates Barbeque Nation Restaurants.
It additionally operates Toscano eating places and UBQ by Barbeque Nation Restaurant.
In FY20, the corporate reported income of Rs 851 crore and a lack of Rs 33 crore.
The firm’s CAGR from FY17 to FY20 was at 19.5 per cent.
As of December 2020, Barbeque Nation Hospitality operated 147 retailers throughout India and 6 retailers throughout three international locations — UAE, Oman and Malaysia.
The promoters maintain 60.24 per cent stake, CX Partners owns 33.79 per cent and Rakesh Jhunjhunwala’s funding agency Alchemy Capital holds 2.05 per cent in the corporate.
Here’s what main brokerages say in regards to the challenge.
Nirmal Bang — Subscribe
The firm is constantly incomes margins in the vary of 22-24 per cent.
We consider the corporate has a sturdy engine and can be again on monitor quickly.
We consider the extra correct technique is to analyse Operating Cash Flows (OCF) which has been constructive for the previous 4 years after paying lease liabilities and curiosity price.
The firm has round Rs 173 crore loans on the books which might be decreased from the IPO proceeds, thereby lowering the curiosity legal responsibility in future.
On evaluating EV/Cash era, the valuations of Barbeque Nation look engaging.
With a wholesome stability sheet, strong income progress, and robust money circulation generations, we consider the corporate may be checked out from a long run funding perspective.
Hence, we advocate “Subscribe for long run”.
Reliance Securities — Subscribe
The IPO is valued at 12.2x of FY20 EV/EBITDA and a couple of.4x of FY20 EV/Sales, which appears to be like engaging when in comparison with friends like Jubilant FoodWorks and Burger King India.
Additionally, OCF yield of 10 per cent for FY20 is much superior to 2 per cent of Jubilant Foods and a couple of.6 per cent of BKIL.
The informal eating restaurant chain enjoys the second largest share (34 per cent) in the meals providers chain market in India after QSR (47 per cent).
The CDR market – which was estimated at Rs 13,400 crore in FY20 – is anticipated to clock a wholesome 18 per cent CAGR to achieve Rs 30,200 crore by FY25.
Therefore, given regular addition of recent eating places and growing contribution from supply enterprise, the expansion outlook of BNHL appears to be like promising. Hence, we advocate ‘SUBSCRIBE’ to the difficulty.
Angel Broking — Neutral
While the corporate has posted income progress of 20 per cent CAGR between FY18-FY20, it has been repeatedly incurring losses at PAT degree regardless of topline progress.
The Covid-19 pandemic too has had an opposed affect on the operations of the corporate.
Hence we count on earnings will stay below stress over the medium-term.
At the upper finish of the value band, the corporate is asking for a valuation of two.4x FY20 EV/Sales which, we consider, is dear given the present setting and therefore we advocate a “NEUTRAL” ranking to the IPO.
YES Securities — Avoid
The firm is concentrating on a market cap of Rs 1,880 crore post-issue which equates to 12.2x FY20 EV/EBITDA and a couple of.2x P/S, which is considerably lesser than QSR friends like Westlife and Burger King.
But given the extremely capital intensive and extra unstable dine-in enterprise mannequin, we consider the low cost is justified.
Moreover, given the latest pre-IPO allotment in December and January was performed at 50 per cent lower than IPO worth and Covid considerations have once more come again, which might be a near-term headwind for the house, the pricing appears to be like on the upper aspect with not quite a bit left on the desk for buyers.
Despite a robust progress outlook for the house (18 per cent anticipated business CAGR) and robust model fairness for the corporate which ought to assist market share positive factors, we’d advise avoiding the IPO and awaiting higher entry alternatives publish itemizing.
Choice Broking — Avoid
At a better worth band of Rs 500, the corporate is demanding an EV/Sales a number of of 3x (to its FY20 gross sales of Rs 847 crore), which is at low cost to the peer common of three.9x (excluding Jubilant Foodworks Ltd.).
Against the backdrop of a sensible restoration from the pandemic-led lockdown, together with pan-India vaccination drive, the enterprise outlook seems to be bettering.
However, the emergence of the second wave of the Covid-19 infections might delay the enterprise normalcy velocity.
Also, with none significant change in the enterprise fundamentals, the difficulty worth is nearly double the pre-IPO placement worth.
Thus, contemplating the above observations, we assign an “AVOID” ranking for the difficulty.
Photograph: Kind courtesy, Barbeque Nation