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Devyani International Limited made a strong listing debut on the stock market on Monday. Share of Devyani International Limited was listed at 140.9 per share on the National Stock Exchange (NSE), a premium of more than 56 percent over the issue price of 90. The scrip was listed at Rs 141 on the Bombay Stock Exchange (BSE ), a 56.66 percent premium over the issue price of Rs 90.
The largest franchisee of Pizza Hut, KFC and Costa Coffee in India opened its first public offering of Rs 1,838 crore for tender from 4-6 August. The issue saw an overwhelming response from the investors.Devyani International IPO
was subscribed no less than 116.71 times over the 11.25 crore shares. It received bids of more than 1,313.79 crore shares against the aggregate issue size of more than 11.25 crore shares/.
Started with one store in 1997, Devyani International has successfully expanded in more than 26 states and three Union territories in India. With 735 stores nationwide, it is Yum Brand’s largest franchisee. The company operates brands such as KFC, Pizza Hut and Costa Coffee in India and in the international markets. It also owns and operates its own franchisees such as Vaango, Food Street, Masala Twist, Ile Bar, Amreli and Ckrussh Juice Bar in India.
As of March 31, 2021, there were 264 KFC stores, 297 PH stores, and 44 CC stores, contributing 84% to FY21 revenue. Deeply affected by the pandemic, this vertical growth declined 14.0% in FY21 to Rs 954 crore after growing 13.4% in FY20. After the second wave, however, we see encouraging trends in the upturn in sales. We expect the core business to grow the number of stores with 545 stores to 1150 stores (KFC +236 stores to 500, PH +253 stores to 550, CC +56 stores to 100), leading to sales of 41.1% up to Rs 2680 crore against FY24. Gross margins for the core brands (KFC 67.7%, PH 74.1%, CC 78.5%) are expected to persist into the future, given their strong brand appeal.
In the FY19-21 period, revenue growth was impacted by the onset of Covid to Rs 1,135 cr (-6.9 percent CAGR), leading to a consequent reduction in EBITDA to Rs 226.9 crore (-9.8 percent). CAGR) and deepening losses to Rs 81.3 crore from INR 59.3 cr (FY19). However, the operating cash flow was encouragingly positive at Rs 239.6 cr. Debt to equity of the company was 11x (with net debt of Rs 1,212.4 crore) and net worth of Rs 113.8 crore.
Going forward, we expect Devyani International Limited to grow its sales at a CAGR of 41.7 percent to Rs 842 crore in the period of FY21-24E, driven by Core brand sales of 41.1 percent to Rs 2680 crore, International Business Income CAGR of 13.3% to Rs 168 crore, and traction in other operating income up to Rs 378 crore (CAGR of
84.8 percent)
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