Barbeque Nation IPO subscribed 1.32 times on the first day

The public issue of causal dining restaurants chain Barbeque Nation Hospitality is subscribed 1.32 times on the first day of bidding, March 24, so far as investors have put in bids for 66.01 lakh equity shares against the offer size of 49.99 lakh shares, the subscription data available on exchanges revealed.

The issue size has been reduced to 49.99 lakh equity shares from 90.71 lakh equity shares after the company secured Rs 203 crore from anchor investors on March 23, a day prior to the issue opening.

So far the retail investors are lending support as they have put in bids 6.10 times over their reserved portion. The portion set aside for non-institutional investors was subscribed 6 percent and that of employees 41 percent, whereas qualified institutional buyers’ portion was subscribed 37 percent.

Barbeque Nation Hospitality is looking to mop up Rs 452.87 crore via public issue including a fresh issue of Rs 180 crore. The total proceeds acquired from the fresh issue will be utilized for repaying debts availed by the company.

The price band for the offer has been fixed at Rs 498-500 per share, which is almost double compared to its pre-IPO placement issue price of Rs 252 per share. The company had raised Rs 150 crore through pre-IPO placement.

Barbeque Nation is India’s leading casual dining restaurant (CDR) chains (in terms of outlet count as of September 2020) and International Barbeque Nation Restaurants. The company owns and operates Toscano Restaurants and UBQ by Barbeque Nation Restaurants.

While suggesting a neutral rating to the IPO, Angel Broking stated that the company has recorded revenue growth of 20 percent CAGR between FY18 and FY20, but it has been constantly incurring losses at PAT level in spite of topline growth.

The COVID-19 pandemic has also harmed the operations of the company hence the brokerage predicts that profits will remain strained over the medium term.

“At the higher end of the price band the company is asking for a valuation of 2.4x FY20 EV/Sales which we believe is expensive given the current environment,” said Angel Broking.