Devyani International Limited saw its initial public offering (IPO) closed its second day of subscription on Thursday. The KFC and Pizza Hut chain operator saw an oversubscription to its public issue by 6.73 times. The company had received bids for 78.78 crore equity shares against an issue size of 11.25 crore shares as per subscription data on the exchanges. In the first half of the day, the IPO size was reduced from 20.42 crore equity shares to 11.25 crore shares after the company had raised a massive Rs 824.87 crore from anchor investors prior to the issue making its debut in the market. Anchor investors saw an allotment of 9.16 crore given to them; there were 62 anchor investors involved in this stage of subscription.
As far as investor subscriptions go, the retail investor segment accounted for the largest subscription out of all the other categories. The retail investors had subscribed to the issue a total of 23.16 times against their allotted portions. Following that the non-institutional investors (NIIs) were subscribed 6.68 times their allotment. The subscription by the qualified institutional buyers (QIBs) stood at 1.32 times their reserved portion. Employee subscriptions also accounted for a portion of the overall subscription numbers as they had subscribed to the Devyani International IPO 3.12 times what they were allotted. In terms of reservation, the QIBs were given a reservation of 75 per cent. The NIIs and the retail investors were given a reserved portion of 15 per cent and 10 per cent respectively.
Devyani International came out with an issue size of Rs 1,838 crore that consisted of a fresh issue and an offer for sale (OFS). The fresh issue stood at a worth of Rs 440 crore and the OFS aggregated up to Rs 1,398 crore with 155,333,330 equity shares that had a face value of Rs 1 per share. The price band for the issue stood at Rs 86 to Rs 90 per equity share. The company is eyeing an IPO listing date of August 16, however, that is not yet confirmed.
The grey market premium (GMP) for Devyani International on August 6, stood at Rs 65. This is a Rs 5 increase from the previous day’s GMP. This indicated that the shares were trading at a premium of Rs 151 to Rs 155 per equity share on the unlisted market.
Speaking on the company’s finances leading up to the IPO, ICICI Direct said in a note, “DIL is the largest franchisee of KFC in India, contributing 57 per cent to its overall topline. The segment has recorded strong revenue CAGR of 18 per cent in FY19- 21 to | 644 crore, despite pandemic led disruption. The segment’s gross profit also increased at a CAGR of 19 per cent and recorded one of its best gross profit margin (of 68 per cent) in FY21. On the cost front, while all marketing expenditure of KFC is managed by Yum Inc, DIL pays 6 per cent of its gross revenue as fixed royalty.”
Devyani International is one of the largest quick-service restaurant (QSR) chains in the country, with a strong footing in India as well as abroad. The company has three core verticals that contribute to its revenue. The first and major one is the core brands, KFC and Pizza Hut. The second vertical is its international business and the third vertical is the other businesses that comes under the brand’s banner. These other businesses include names such as Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar.
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