About Barbeque Nation IPO: Should You Invest?

Casual dining chain Barbeque Nation IPO launches on March 24, 2021. Before the offer opens, let’s check the review, IPO allotment, and subscription details, and we will also consider if it is a good investment option.

Barbeque Nation IPO Facts

• Barbeque Nation IPO opens on March 24, 2021, is going to be the last IPO of FY21
• The bidding window will close after two days on Friday, March 26, 2021
• The total issue size is Rs 452.87 crores, comprises approximately 90 lakh equity shares; Rs 180 crores from 2750 million fresh equities and 5,457,470 in OFS shares from the promoters
• The shares carrying a face value of Rs 5 are offered at a premium price band of Rs 498-500 apiece
• According to a newspaper advertisement, promoters Sayaji Housekeeping Pvt Ltd. Azhar Dhanani, Sadya Dhanani, Sanya Dhanani, Tamara Pvt Ltd., Aajv Investment Trust, and Menu Pvt. Ltd. have pledged to offload shares through OFS
• Barbeque Nation and Tamara have already raised Rs 150 crores in a pre-IPO placement. Also, some of the promoters have withdrawn at the last moment, which reduced the initial offering size from Rs 1100 crores to the current Rs 452 crore
• Qualified institutional buyers received the highest reservation of 75 percent of the issue size, whereas non-institutional buyers receive a 15 percent quota in the offer. Retail investors get only 10 percent
• The company will utilise around Rs 75 crores from the IPO activity to partially repay/prepay its Rs 148 crores of debt and the rest towards meeting general corporate expenses
• Barbeque Nation is one of India’s fastest-growing casual dining chains with over 160 outlets in India and abroad. It has plans to add more eateries in a future expansion plan
• IIFL Securities Limited, Axis Capital Limited, Ambit Capital Private Limited, SBI Capital Markets Limited are appointed the lead managers for the offer
• Link Intime India Private Limited will function as the registrar
• The IPO is expected to list on the stock exchange on April 7, 2021, following the finalisation of Barbeque Nation IPO allotment on April 1, 2021

Barbeque Nation IPO: Should You Subscribe?

Let’s look at the merit of the offer to see if it is worth investing in.

• On the positive side, the company is one of the fastest-growing CDRs (casual dining restaurant) in India
• It has outlets not only in the Indian cities but in foreign countries as well
• Despite being hard hit by the pandemic, Barbeque Nation recovered its growth, and in November 2020, its business volume stood at 84 percent of its business on November 2019
• It protected 98 percent of its outlets during the pandemic, and only three of its outlets were closed due to high rent
• It offers a diversified menu, both in vegetarian and non-vegetarian categories
• The company exhibited steady growth in revenue over the past few years. Revenue grew from Rs 590 crores in FY 2018 to Rs 850 crores in FY20

However, the company has recorded losses in the last few fiscals, which is a big negative. But the loss is mainly due to high-interest debts, which the company plans to reduce with the proceeds from the IPO. Apart from that, the company has a long term business expansion plan. It has recently diversified with 61.35 percent equity share acquisition in the fully diluted basis in one of its subsidiaries, Red Apple. In 2018, it launched UBQ, which is the food delivery arm of the brand.

Considering the industry outlook, it may also seem like a good investment. The casual dining restaurant segment of India is expected to grow at a CAGR of 20 percent. Besides, Barbeque Nation’s listed peers like Jubilant Firework Ltd, Westlife Development Ltd., Specialty Restaurant Ltd., and Burger King have witnessed strong interest from investors in recent time. However, we suggest you decide to invest after looking into all aspects of the offer. If needed, consult your financial advisor to determine if it is the right kind of investment for your portfolio.

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