With IPO On The Menu, Barbeque Nation Eyes To Raise Rs 180 Crore At Rs 498-500 Per Share

By Angel Broking | Published on 23rd March 2021 | 54

With IPO On The Menu, Barbeque Nation Eyes To Raise Rs 180 Crore At Rs 498-500 Per Share

The casual dining chain’s IPO opens on March 24, 2021, for bidding. The company is trying to raise Rs 180 crores from the sale of 2750 million fresh equity shares, which it plans to use in business expansion and reducing its debt of Rs 148 crores.

It is the second attempt by the restaurant chain after it failed to launch an IPO three years ago. In 2020, its plans got delayed because of the COVID-19 outbreak. The reason behind issuing IPO is to take advantage of the current high liquidity condition in the market.

However, the new offer size is way less than the initial plan of Rs 1100 crores. The current offer size is Rs 452.87 crores, which comprises fresh issues and an offer for sale equities from existing shareholders. Of Rs 180 crore that it plans to raise from a fresh equity sale, Rs 75 crores will be used to write off some borrowings and the remaining Rs 55 crores towards business expansion.

Barbeque Nation is one of India’s fastest-growing casual dining chain, with 138 restaurants in 73 Indian cities and seven restaurants abroad. However, the restaurant was hit hard by the outbreak of the pandemic. Between April and May, Barbeque Nation witnessed zero business following nationwide lockdown. But the company rebounded quickly once restaurants were back in business, and in November 2020, its business was 84 percent of what it had in November 2019.

The restaurant also saved 98 of its outlets from being closed. Before the pandemic, Barbeque Nation had over 160 outlets and more than 8000 workers.

Pandemic Disruption and Surviving Adversities

To survive the pandemic, it moved to a new business model of delivering food. It has now introduced a concept called ‘Barbeque In a Box’, which delivers its fares to the customer’s doorstep.

“The delivery business has seen good response and is growing – it does digital numbers as a proportion of revenue,” said Rahul Agarwal, CEO. He also added that the long term business expansion plan remains intact. Once things stabilises, the company has plans to add more restaurants to its 160 plus strong brand.

On the financial front, the eatery cited loss as a risk factor in RHP filing with SEBI. Apart from that, it has a debt of Rs 148 crores, which needs repaying. The company will repay its debt partially from the proceeds from the IPO to become debt lite.

Quick Details of The Barbeque Nation IPO

  • The Barbeque Nation IPO bidding window opens on March 24, 2021, for two days. It will close on March 26, 2021
  • Barbeque Nation IPO size contains fresh issues and offer for sale equities from promoters
  • Barbeque Nation price band is fixed at Rs 498-500 per shares
  • Investors will have to apply for a minimum of 30 shares, translating to the minimum investment amount of Rs 15,000
  • 75 percent of the issue size is reserved for qualified institutional investors (QIBs). Retail investors receive a tiny portion of 10 per cent
  • The issuers have already raised Rs 150 crores ina pre-IPO round from Xponentia Capital and Jubilant Foodworks, the parent company of Domino’s Pizza in India

Conclusion

The CDR segment is one of the fastest-growing segments in the Indian restaurant industry, with a projected growth rate of 20 percent CAGR between FY19 and FY24. Besides, the restaurant offers a diversified food offering and a great customer experience. Its revenue from weekday sales and lunch is higher than the industry average.

Barbeque Nation recently acquired Red Apple to diversify beyond its flagship brand, Barbeque Nation. The company also ranked 13 among all Indian companies across categories in the Economic Times’ ‘Great Places To Work’ survey of 2019.

The company maintained steady growth over the past three fiscals and has a long-term business objective to expand its business further.