Barbeque Nation shares soar 18% on debut, get locked in 20% upper circuit

Rally surprised Street as most were expecting subdued listing due to the fresh turbulence in restaurant sector caused by the lockdown imposed in Maharashtra to contain Covid-19 spread

Barbeque Nation Hospitality, a company operating casual dining restaurant chains, saw its shares gain 18 per cent during their stock market debut on Wednesday. The stock ended at Rs 587.8 with a gain of Rs 87.8 over the issue price of Rs 500 per share. The stock touched a low of Rs 481.85 and a high of Rs 587.8 on the NSE, where Rs 285 crore worth of shares changed hands. During the close of trade, the stock was locked in a 20 per cent upper circuit over its pre-open price of Rs 490.

The rally surprised the Street as most were expecting a subdued listing due to the fresh turbulence in the restaurant sector caused by the lockdown measures imposed in Maharashtra to contain the spread of Covid-19 infections.

“As expected the IPO opened at a discount to issue price. The company has incurred losses in some of the recent fiscals and looking at the current Covid-19 situations there is no assurance that net profit will not decline in future. Investors of this IPO are advised to exit from the company in case of any bounce in the share price,” said Saurabh Joshi, an analyst at Marwadi Shares and Finance.

At Wednesday’s closing price, Barbeque Nation was valued at Rs 2,207 crore. Analysts say the stock is attractively priced vis-à-vis competition.

“At current price the stock trades at 3.4 times enterprise value-to sales which is at a discount to other peers like Jubilant Foodworks (Domino’s) and Westlife Development (McDonalds). That apart the second wave of pandemic has raised the risk of further slower growth in the near term. While valuations appear cheap, investors only with a long term horizon may look at the stock,” said Siddhartha Khemka, Head – Retail Research, Broking & Distribution, Motilal Oswal Financial Services.

Barbeque Nation’s IPO had garnered six times subscription. The IPO comprised of Rs 180 crore of fresh fund raise and secondary share sale worth Rs 273 crore.