Barbeque Nation Hospitality Limited IPO (Barbeque Nation IPO) Detail

The first Barbeque Nation Restaurant was established in 2008 and as of November 30, 2019, the network has been steadily grown to 138 Barbeque Nation Restaurants in 73 cities in India and 7 International Barbeque Nation Restaurants in 3 countries outside India. The company has recently diversified into another brand “Red Apple” which operates 10 Italian restaurants in 2 cities of India i.e. Bengaluru and Chennai.

Competitive strengths

  • One of India’s fastest-growing restaurant brands.
  • Diversified offerings for both vegetarian and non-vegetarians.
  • Experienced promoters and managers team.
  • Healthy financial position with a proven track record of revenue growth.

Company Promoters:

Sayaji Hotels Limited, Sayaji Housekeeping Services Limited, Kayum Dhanani, Raoof Dhanani, and Suchitra Dhanani are the company promoters.

Company Financials:

Summary of financial Information (Restated Consolidated)
Particulars For the year/period ended (₹ in million)
30-Nov-20 31-Mar-20 31-Mar-19 31-Mar-18
Total Assets 9,085.85 9,554.58 8,190.85 7,231.60
Total Revenue 2,366.08 8,507.94 7,425.41 5,904.48
Profit After Tax (1,006.48) (329.28) (383.86) (58.00)

Objects of the Issue:

  • To make prepayment/repayment of all or a part of the company’s outstanding borrowings availed on a consolidated basis.
  • To meet general corporate purposes.

Barbeque Nation IPO Details

IPO Opening Date Mar 24, 2021
IPO Closing Date Mar 26, 2021
Issue Type Book Built Issue IPO
Face Value ₹5 per equity share
IPO Price ₹498 to ₹500 per equity share
Market Lot 30 Shares
Min Order Quantity 30 Shares
Listing At BSE, NSE
Issue Size Eq Shares of ₹5
(aggregating up to ₹452.87 Cr)
Fresh Issue Eq Shares of ₹5
(aggregating up to ₹180.00 Cr)
Offer for Sale 5,457,470 Eq Shares of ₹5
(aggregating up to ₹272.87 Cr)

Barbeque Nation IPO Tentative Timetable

The Barbeque Nation IPO open date is Mar 24, 2021, and the close date is Mar 26, 2021. The issue may list on Apr 7, 2021.

IPO Open Date Mar 24, 2021
IPO Close Date Mar 26, 2021
Basis of Allotment Date Apr 1, 2021
Initiation of Refunds Apr 5, 2021
Credit of Shares to Demat Account Apr 6, 2021
IPO Listing Date Apr 7, 2021

Barbeque Nation IPO Lot Size

The Barbeque Nation IPO market lot size is 30 shares. A retail-individual investor can apply for up to 13 lots (390 shares or ₹195,000).

Application Lots Shares Amount (Cut-off)
Minimum 1 30 ₹15,000
Maximum 13 390 ₹195,000

Barbeque Nation IPO Promoter Holding

Pre Issue Share Holding 47.80%
Post Issue Share Holding 37.79%

 

Category IPO Subscription
QIB 0.37x
NII 0.09x
RII 9.20x
Employee 0.59x
Total 1.89x

Our View

Strengths:
Stable profitability in mature stores
High growth prospects with an increase in outdoor eating habits and casual dining experience.

Weakness:
Fragmented Industry and heavy competition can stagnate growth
Any dent on brand reputation can lead to a large impact on business

Valuation
Barbeque Nation is priced at 2x EV/Sales. Assuming the operating margin of the matured restaurants adj for rent is ~15%, the company is valued at 22x EBITDA on mature restaurants and ~1x Price to sales of newer restaurants. This amounts to a P/E of around 37x on mature restaurants on normalized earnings.

Using cash flow measure, the company is valued ~ 27x free cash flow (ex-growth CAPEX). Alternatively, Jubilant Foodworks recently bought a 10% stake in Barbeque Nations for Rs. 92 Cr, about half the market value asked in IPO. However, one may argue it was due to the strategic benefits Jubilant Foodworks brings to the table.

Considering the sound business model, industry tailwinds, high cash conversion, and not so aggressive valuation we recommend SUBSCRIBE to this issue.

We would wait for the performance to recover from Covid-19 restrictions. The relatively modest valuation reflects a likely delay in financial performance.

Note: We do not recommend buy just because the IPO market is hot. We do not earn any commission or fee for promoting IPOs so expect an honest review from us on a business model and valuation.

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