Book partial listing gains in Devyani International

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Devyani International made a strong stock market debut on Monday. The shares of the company opened for trading at Rs 140.90 on the National Stock Exchange, compared to the issue price of Rs 90, marking a premium of 56.56% or Rs 50.9. The stock is witnessing some profit booking as it corrected a bit and was seen quoting Rs 124.75 apiece at 12:30 pm.

Listing strategy

Most brokerages had a subscribe rating on the IPO. Saurabh Joshi, of Marwadi Shares and Finance, suggest investors book partial profit on listing and hold the remaining shares for long term investment. Considering the FY-21 adjusted EBITDA (Earnings before interest tax depreciation and amortization) of Rs 178.9 crore, the listing price of Rs 141 implies an EV(enterprise value)/EBITDA of 95.27 with a market cap of Rs.16,706.3 crore, while its peers namely Jubilant Food and Westlife Development are trading at EV/EBITDA of 66.13 and 190.09 respectively. The company has a product portfolio of well recognized QSR brands including KFC, Pizza Hut, Costa Coffee and the long-term growth story of the company is intact.

“Devyani International the largest franchisee of Pizza Hut, KFC, and Costa Coffee in India made a remarkable debut on the stock exchanges, with the stock listing at a 56 % premium to the issue price. The stocks were listed at 140.90 apiece on NSE against the issue price of Rs.90. As the stocks were listed at more than 50% it would be wise to book some profit at least 50% of the shares allotted and hold the remaining shares for the long-term,” said Gaurav Garg is Head of Research at CapitalVia Global Research.

About Devyani International

Devyani International is the largest franchisee of Yum Brands and among the largest quick-service restaurants (QSR) chain operators in India with 655 stores across 155 cities all over the country as of Mar 31, 2021. Yum Brands Inc operates many fast-food brands i.e. Pizza Hut, KFC, and Taco Bell brands. The company operates 264 KFC stores, 297 Pizza Hut stores, and 44 Costa Coffee stores in India as of March 31, 2021.

The company has three business verticals that is of Core Brands that hold franchises of KFC, Pizza Hut, and Costa Coffee stores in India. While the international business vertical houses its stores in foreign countries like Nepal and Nigeria. Whereas under other business vertical it operates own branded stores i.e. Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar.

For the financial year ended March 31, 2021, the company reported total revenue of Rs 1,198.90 crore compared to Rs 1,323.68 crore in FY19. While the company reported a loss of Rs 81.32 crore in FY21 versus loss of Rs 59.29 crore posted in FY19.

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