{"id":861,"date":"2021-08-03T07:01:31","date_gmt":"2021-08-03T07:01:31","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=861"},"modified":"2022-01-31T14:24:28","modified_gmt":"2022-01-31T14:24:28","slug":"kfc-pizza-hut-and-costa-coffee-operator-devyani-int-ipo-will-hit-the-primary-market-on-aug-04","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/kfc-pizza-hut-and-costa-coffee-operator-devyani-int-ipo-will-hit-the-primary-market-on-aug-04\/","title":{"rendered":"KFC, Pizza Hut and Costa Coffee operator Devyani Int.  IPO will hit the primary market on Aug 04."},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>It says that \u201cThings never grow in\nisolation\u201d. The rise of a sector in equity markets also brings sunshine in the\nassociated sectors too. As quick as the OTT (Over the Top) media platforms are\ngearing up in the Indian media sector and spending budget of Indian families is\nrising on weekend parties, the restaurant chains are gaining the limelight.\nAfter the success stories of Jubilant Foodworks and Westlife Development,\nBurger King and Barbeque Nation in the Indian secondary market, Devyani\nInternational is set to open on August 04 with fresh issue and Offer for Sale.\nThe company operates KFC, Pizza Hut and Costa Coffee as their core brands in\nIndia. <\/p>\n\n\n\n<p><strong>Devyani\nInternational Ltd. IPO Details<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Issuer Company: Devyani Int.<\/li><li>Industry: &nbsp;Food chain <\/li><li>IPO Size: 1,838 cr.<\/li><li>Price Band: 86-90<\/li><li>Issue Open Date: 04 Aug, 2021<\/li><li>Issue Close Date: 06 Aug, 2021<\/li><li>Listing Date: 16 Aug, 2021<\/li><li>Minimum Lot Size: 165<\/li><li>Face Value: 1<\/li><li>Employee Discount:<\/li><li>Retail Allocation: 10%<\/li><li>Listing Exchange: NSE, BSE<\/li><\/ul>\n\n\n\n<p><strong>Composition\nof Issue Size<\/strong><\/p>\n\n\n\n<p>The issue size of Rs. 1,838 cr. is a\nmix of fresh issue of Rs. 440 cr. and offer for sale of Rs. 1,398 cr. at the\nupper price band.<\/p>\n\n\n\n<p>Offer for Sale: The object of the\nOffer for Sale is to allow Dunearn Investment Pte. Ltd. and RJ Corp. to sell an\naggregate of up to 15.5 cr. equity Shares held by them amounting at Rs. 1,398\ncr. The company will not receive any proceeds from the Offer for Sale. <\/p>\n\n\n\n<p>Fresh Issue: The company has planned\nto raise fresh capital comprising an aggregate of 48.8 million equity shares\nhaving Face Value \u20b91 aggregating up to Rs. 440 Cr at the upper price band of\nRs. 90. Out of the net proceeds<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>An amount of Rs. 324 cr. will be utilized for\nrepayment\/prepayment of certain borrowings.<\/li><li>Rest will be utilized for general corporate\npurpose.<\/li><\/ul>\n\n\n\n<p><strong>About the\nCompany<\/strong><\/p>\n\n\n\n<p>Devyani International is the largest franchisee of Yum Brands in India and is among the largest operators of chain quick service restaurants (QSR) in India and operates 655 stores across 155 cities in India, as of March 31, 2021. Yum! Brands Inc. operates brands such as KFC, Pizza Hut and Taco Bell brands and has presence globally with more than 50,000 restaurants in over 150 countries, as of December 31, 20201. In addition, we are a franchisee for the Costa Coffee brand and stores in India. Their business is broadly classified into three verticals that includes stores of KFC, Pizza Hut and Costa Coffee operated in India (KFC, Pizza Hut and Costa Coffee referred to as \u201cCore Brands\u201d, and such business in India referred to as the \u201cCore Brands Business\u201d) stores operated outside India primarily comprising KFC and Pizza Hut stores operated in Nepal and Nigeria (\u201cInternational Business\u201d) and certain other operations in the F&amp;B industry, including stores of our own brands such as Vaango and Food Street (\u201cOther Business\u201d). <\/p>\n\n\n\n<p>Must Read: <a href=\"https:\/\/www.invest19.com\/blog\/exxaro-tiles-ipo-will-hit-the-primary-market-on-aug-04-should-you-subscribe\/\">Exxaro Tiles IPO will hit the primary market on Aug 04. Should you subscribe?<\/a><\/p>\n\n\n\n<p>&nbsp;<strong>Industry Growth Drivers<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Urbanization in India is in rising trend and\nexpected to continue in the upcoming years.<\/li><li>Growth in the quick service restaurant (\u201cQSR\u201d)\nchannel is supported by urbanization and increasing exposure of the youth to\norganized retail chain.<\/li><li>The total foodservice revenue is expected to\ngrow to \u20b917,220.3 billion (US$219.4 billion) in 2025, registering a strong CAGR\nof 15.5% from 2020 to 2025.<\/li><li>QSR channel is expected to lead the\nfoodservice industry and likely to grow at a CAGR of 6.5% in next five years.<\/li><li>The characteristics of the industry such as\naccounting transparency, continuous updating in their product offerings, less\noutlets penetration and organized operations with quality control will keep the\nsales of QSR chains intact.<\/li><li>Indian families are getting more health\nconscious and organized food chain is an optimal fit for their dining.<\/li><li>Rising trend of digital delivery platforms\nsuch as Zomato and Swiggy will increase the scope of QSRs.<\/li><li>Devyani Int. is the single largest quick-service restaurant\n(QSR) company in India listed on Swiggy.<\/li><\/ul>\n\n\n\n<p><strong>Peers\nComparison<\/strong><\/p>\n\n\n\n<p>In the listed space, the organized food retail chain will face\ncompetition from Jubilant Foodworks, Burger King, Westlife Development and\nBarbeque Nation. While in the unlisted arena, the food retailer faces\ncompetition from all organized and unorganized food retail chains.<\/p>\n\n\n\n<p><strong>Financials<\/strong><\/p>\n\n\n\n<p><strong>Growth in\nCore brand Outlets<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"604\" height=\"352\" src=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-188.png\" alt=\"\" class=\"wp-image-863\" srcset=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-188.png 604w, https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-188-300x175.png 300w, https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-188-520x303.png 520w\" sizes=\"auto, (max-width: 604px) 100vw, 604px\" \/><\/figure>\n\n\n\n<p><strong>Observations:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Growth in KFC stores is outperforming other\ncore brands. KFC stores have seen a growth rate of 40%<\/li><li>Growth in Pizza Hut stores seems sluggish. The\ncompany has opened only 29 stores.<\/li><li>Costa Coffee stores are closed heavily and\ncompany seems to focus mainly on KFC and Pizza Hut stores.<\/li><\/ul>\n\n\n\n<p><strong>Break-down\nof revenue from core brands<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"466\" height=\"286\" src=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-189.png\" alt=\"\" class=\"wp-image-864\" srcset=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-189.png 466w, https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/08\/Screenshot-189-300x184.png 300w\" sizes=\"auto, (max-width: 466px) 100vw, 466px\" \/><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Company generates 81.5% or Rs. 9,776.06\nmillion of their total revenues from the Core Brands- KFC, Pizza Hut and Costa\nCoffee.<\/li><li>KFC generates 66% of the revenues from the\nCore brands.<\/li><li>Same store sales growth has fallen sharply\nlast year in KFC, Pizza hut and Costa Coffee by 33.69%, 30.25% and 61.64%\nrespectively.<\/li><\/ul>\n\n\n\n<p><strong>Financial\nStatements<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  Income Statement (In\n  Millions)\n  <\/td><td>   &nbsp;   FY21<\/td><td>   FY20  <\/td><td>   FY19   <\/td><\/tr><tr><td>\n  Gross Operating Income\n  <\/td><td>\n  11988.95\n  <\/td><td>\n  15350.41\n  <\/td><td>\n  13236.83\n  <\/td><\/tr><tr><td>Cost of Employee &amp;     Inventory   <\/td><td>\n  4989.92\n  <\/td><td>\n  6858.81\n  <\/td><td>\n  5804.39\n  <\/td><\/tr><tr><td>Impairment of   Non-Financial Assets   <\/td><td>\n  480.05\n  <\/td><td>\n  38.77\n  <\/td><td>\n  247.53\n  <\/td><\/tr><tr><td>\n  Other Expenses\n  <\/td><td>\n  4089.18\n  <\/td><td>\n  5750.21\n  <\/td><td>\n  4511.97\n  <\/td><\/tr><tr><td>\n  EBITDA\n  <\/td><td>\n  2429.8\n  <\/td><td>\n  2702.62\n  <\/td><td>\n  2672.94\n  <\/td><\/tr><tr><td>\n  Depreciation\n  <\/td><td>\n  2294.53\n  <\/td><td>\n  2233.14\n  <\/td><td>\n  2028.26\n  <\/td><\/tr><tr><td>\n  Interest \n  <\/td><td>\n  1528.03\n  <\/td><td>\n  1584.37\n  <\/td><td>\n  1356.04\n  <\/td><\/tr><tr><td>\n  Profit Before Tax\n  <\/td><td>  -1392.76   <\/td><td>  -1114.89   <\/td><td>\n  -711.36\n  <\/td><\/tr><tr><td>\n  Exceptional Items\n  <\/td><td>\n  -568.84\n  <\/td><td>\n  -345.78\n  <\/td><td>\n  -131.48\n  <\/td><\/tr><tr><td>\n  &nbsp;Tax\n  <\/td><td>\n  -10.68\n  <\/td><td>\n  18.41\n  <\/td><td>\n  13.02\n  <\/td><\/tr><tr><td>\n  Profit After Tax\n  <\/td><td>   &nbsp;-813.24<\/td><td>   -787.52   <\/td><td>   -592.9  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Revenues have been declined in FY21 by 22% due\nto reduced spending by people and restrictions on movement of man, material and\nmachines this financial year. <\/li><li>Majority cost of a food retail chain is\nallocated to cost of raw foods which has been slipped by 24.52%.<\/li><li>Employee cost of the company has fallen by\n31.5%.Cost of Employee &amp; Inventory is slipped more in comparison with\nrevenues which shows an operational efficiency is achieved by firm.<\/li><li>&nbsp;EBITDA\nfigure is fallen to Rs. 2,429.8 million reduced by 10%.<\/li><li>Net Losses are expanded to Rs. 813.24 million\nfrom Rs.787.52 million. <\/li><li>QSR chain has a free cash flows of Rs.\n1,419.82 million<\/li><li>Devyani Int. is a leveraged company as it has\na debt of Rs. 359.38 cr.<\/li><\/ul>\n\n\n\n<p>Also Read: <a href=\"https:\/\/www.invest19.com\/blog\/windlas-biotech-ipo-will-hit-the-primary-market-on-aug-04-should-you-subscribe\/\">Windlas Biotech IPO will hit the primary market on Aug 04. Should you subscribe?<\/a><\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 3,653<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"861\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">4    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>It says that \u201cThings never grow in isolation\u201d. The rise of a sector in equity markets also brings sunshine in the associated sectors too. As [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/kfc-pizza-hut-and-costa-coffee-operator-devyani-int-ipo-will-hit-the-primary-market-on-aug-04\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":866,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[70,2,7,10],"tags":[],"class_list":["post-861","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo","category-stock-market","category-investment","category-featured"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=861"}],"version-history":[{"count":2,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/861\/revisions"}],"predecessor-version":[{"id":1078,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/861\/revisions\/1078"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/866"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}