Devyani Int'l makes strong debut, lists at 57% premium over issue price

The stock listed at Rs 141, a 57 per cent per cent premium over the issue price of Rs 90 per share on the BSE and the NSE

Devyani International made a strong market debut on Monday as its shares listed at Rs 141 on the bourses, a 57 per cent per cent premium over the issue price of Rs 90 per share. At 10:01 am, the stock was trading at Rs 133.80, 49 per cent above its issue price after hitting a low of Rs 130.70 in intra-day trade on the BSE. A combined 47.2 million equity shares changed hands on the counter on the NSE and BSE.

Devyani International is the largest franchisee of Yum Brands in India and one of the top operators of chain quick-service restaurants (QSRs).  It collaborates with Yum across various aspects of its operations for KFC and Pizza Hut for the franchisor’s brand protection and management including product innovation and development, brand strategy and technology initiatives. In addition, Devyani also has a franchisee for the Costa Coffee brand and stores in India.

The initial public offer (IPO) of Devyani International got a robust response from the investors as the issue got subscribed 116.7 times. The qualified institutional buyers (QIBs) portion was subscribed 95.27 times, the non-institutional investors (NII) or wealthy investor portion was subscribed 213 times, and the retail portion was subscribed 39.5 times.

Analysts had largely assigned a 'Subscribe' rating to the issue as they find the company's valuations compelling and believe the company is poised for long-term growth.

We believe the company remains well placed for long term growth considering its portfolio of recognised global brands catering to a range of customer preferences, cross-brand synergies, expansion of store network and EBITDA positive earnings, said Ronak Kotecha, an analyst at Anand Rathi Shares and Stock Brokers.

Devyani is well placed to benefit from growing industry trends as it has a strong portfolio of highly recognized global brands which cater to a range of customer preferences. Its close association with Yum together with its technical, marketing and operational expertise has enabled them to establish itself as a comprehensive player in the QSR industry in India. It has a strong presence in key consumption markets.

Moreover, the company has been able to leverage substantial operating synergies across the brands in which it operates. Going forward, the company intends to strategically expand its store network for its core brand business. It also plans to increase focus on delivery channels and also invest in technology and focus on its digital capabilities. "The financial performance has been tepid for the company which has further got impacted in FY21 due to the pandemic. However, the company intends to improve its unit performance which would aid better margins," an analyst at Religare Broking said.