Upcoming IPO – Barbeque Nation

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The Company

The Barbeque Nation was originally incorporated as Sanchi Hotels Private Limited on October 13, 2006 at Indore subsequently the name was changed to Barbeque-Nation Hospitality Private Limited on February 18, 2008 and later on became a Public Limited company on March 4, 2008 .

Barbeque Nation is now based out of Bengaluru and currently own & operates 138 outlets in India , 5 outlets in UAE , 1 in Malaysia and in Oman.

It has 13 Restaurants in East India , 30 in west, 44 in north & 51 in south of theses 72 are in metro cities , 21 in tier -I Cities, 39 in Tier-II Cities & 6 in others.

Its one of the leading casual dining restaurants (CDR) in india and have been voted among the top ten employers within the Indian retail industry for 2019 by Great Places to Work and 14th among best large workplaces in Asia by Great Places to Work Institute.

Promoters

The promoters of BN are SHL, SHKSL, Kayum Dhanani, Raoof Dhanani and Suchitra Dhanani. The Promoters hold 60.21% along with Promoters Group. Some of the Promoters have also pledged their shares .

There are currently disciplinary action going on including penalty imposed by SEBI or stock exchanges in the last five financial years .

Purpose of IPO

There will be offer for sale & Fresh issue of shares .

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Offer for Sale

Selling 9,822,947 Equity Shares . (More to be updated on IPO)

Fresh Issues

The net proceeds will be utilized for prepayment or repayment of all or a portion of certain outstanding borrowings availed by our Company on a consolidated basis and general corporate purposes.

The company have taken significant loans from Axis Bank & Yes Bank.

Financials

The company have not been able to earn profit in last 2 & half years due to high interest on borrowings.

The company have shown growth in it’s average per cover over the years however it has de-grown in FY 2019-20.

The company have been able to generate positive cash flows in all last 3 & 1/2 years it’s because company have high interest & depreciation expenses.

Along with debt the company have also been raising significant equity in last 3 years.

Though The company is not making profit today and the future of the company is relatively dependent on growth of CDR’s in India.

The Industry

The CDR industry is estimated to be Rs. 118 Billion ($ 1.57 Billion) which is expected to grow at CAGR of 20% to reach Rs. 294 Billion ($ 3.92 Billion) by fiscal year 2024.

The chain market have around 8% market share in food service market with majorly being hold by unorganized market at 69%.The chain market is expected to reach 13% market share in 2024.

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The chain market have 34% market share in organized food service market which will remain at 34% in 2024.

At CDR average spend person is in range of Rs. 250 to Rs. 1000 and they normally focus on moderately price food and table service to high quality.

North India Cuisines has the highest market share of 27.1% in cuisines in India wherein key players are Barbeque Nation, Moti Mahal, Pind Balluchi.

Just like how F&B is a game changer for Cinemas profitability in case of CDR it’s the beverages since it cost less as compared to other food items on menu.

The key drivers of Chain CDRs in India include increasing experimentation, increasing spending capacity of the Indian consumer, particularly in the Tier II and III cities, continuous innovation in terms of formats, themes and cuisines and building efficiencies in terms of food cost, manpower cost etc.

However, the above is now going to change due to habits developed & being developed during the COVID-19 .

Peers

Westlife Development Limited which have traded at more than PE ratio of 150 & Jubilant Foodworks Limited which trades at PE ratio of 85.

The industry average of PE ratio is some where above 100.

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Based on above it, it is possible the price may be too high or may also offer bumper listing gains depending on the average PE ratio asked.

Other Facts

  1. In last three years two of the company CFO’s have resigned.
  2. Some promoters are into similar line of business and have some conflict of interest
  3. All the restaurants are on lease basis on which company have done significant leasehold improvements.
  4. Company have Contingent liability of around Rs. 91 crore.

What is Casual Dining Restaurants ?

A restaurant serving moderately to high priced food in an ambience oriented towards providing an affordable dining experience, with table service along with some restaurants offering eclectic high quality interiors and high standards of service. The offerings bridge the gap between QSRs and fine dining restaurants.

E.g.: Farzi Cafe, Barbeque Nation, Oh! Calcutta, Sagar Ratna, Moti Mahal Delux etc.

Read More on Stock Info.

Disclaimer

The author may or may nor invest in the IPO of the company if floated .





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