Barbeque Nation Limited IPO

Barbeque Nation Limited IPO

Incorporated in 2006, Barbeque Nation Restaurants is one of the leading casual dining restaurant chains (in terms of outlet count as of September 30, 2020) according to the Technopak Report, and International Barbeque Nation Restaurants. The company also owns and operates Toscano Restaurants and UBQ by Barbeque Nation Restaurant.

The first Barbeque Nation Restaurant was launched in 2006 by SHL, one of our Promoters. The company launched our first Barbeque Nation Restaurant in 2008 and subsequently acquired five Barbeque Nation Restaurants owned by SHL in 2012.

Barbeque Nation have steadily grown our owned and operated Barbeque Nation Restaurant network from a single restaurant in 2008 to 147 Barbeque Nation Restaurants (including opened, temporarily closed and under construction outlets) across 77 cities in India and six International Barbeque Nation Restaurants in three countries outside India as of December 31, 2020.

The company owns 61.35% of the equity share capital on a fully diluted basis of one of our Subsidiaries, Red Apple, which owns and operates nine restaurants under the brand name, “Toscano”, a casual dining Italian restaurant chain and operates one restaurant each under the brand names “La Terrace” and “Collage” respectively.

The first Toscano Restaurant commenced operations in June 2008 and, as of December 31, 2020, we operated eleven Italian Restaurants, nine of which are under the brand name “Toscano”, in three cities in India. In November 2018, Barbeque Nation launched UBQ by Barbeque Nation Restaurant to provide a la carte Indian cuisine in the value segment. At present, UBQ by Barbeque Nation Restaurant predominantly caters to the delivery segment.

Barbeque Nation Restaurants, compared to other fixed-price dining options, offer competitive attractions such as a wide range of vegetarian and non-vegetarian appetisers and main courses, a popular dessert menu, a pleasant and casual dining environment, and prompt service thereby making it a popular destination for celebrations. The company also periodically run popular food festivals at our Barbeque Nation Restaurants offering our guests a range of Indian, international and fusion cuisines.

Product Portfolio:

    • Barbeque Nation Restaurants offers the best quality of food offerings, ambience, and services to customers.
    • Periodically company run popular food festivals at Barbeque Nation Restaurants offering guests a range of Indian, international and fusion cuisines.
    • The company offers a wide range of vegetarian and non-vegetarian appetisers and main courses, a popular dessert menu, a pleasant and casual dining environment and prompt service.

Strength of the Company:

    • One of India’s fastest-growing restaurant brands.
    • Diversified offerings for both vegetarian and non-vegetarians.
    • Experienced promoters and managers team.
    • The healthy financial position with a proven track record of revenue growth.

Risks Relating to Business:

    • Despite an increase in the number of Restaurants and growth in consolidated revenues, consolidated profits have declined in some of the recent fiscals
    • If the Company is unable to obtain suitable locations for new restaurants this may result in an adverse effect on the anticipated growth of a business.
    • The premises of the Company’s Registered and Corporate Office and all restaurants are either leased (including subleases) or licensed. 
    • A company’s business may be affected by seasonality.
    • Certain of the Company’s Promoters and Promoter Group members were involved in SEBI proceedings in relation to certain non-compliances under securities-related laws.

IPO Details:

IPO Date March 24th, 2021 to March 26th, 2021
Issue Type Book Built Issue IPO
Issue Size Rs 452.87 Crores
Fresh Issue Rs 275 crore
Offer for Sale 98,22,947 equity shares
Face Value Rs.5 per equity share
IPO Price Rs.499 to Rs.500 equity share
Min Order Quantity 30
Listing At BSE, NSE

IPO Objective:

    • To make prepayment/repayment of all or a part of the company’s outstanding borrowings availed on a consolidated basis.
    • To meet general corporate purposes.

Financial Performance:

FY2018 FY2019 FY2020 9M FY2021
Revenue 590.4 742.5 850.8 236.6
Expenses 450.1 593.2 682.8 224.0
Comprehensive income -6.5 -40.7 -35.6 -98.6
Margin (%) -1.1 -5.5 -4.2 -41.7

 Tentative Time Table:

IPO Opens on 24 March 2021

IPO Closes on 26 March 2021

Basis of Allotment Date: Apr 5, 2021

Initiation of Refunds: Apr 5, 2021

The credit of Shares to Demat Account: Apr 6, 2021

IPO Listing Date: Apr 7, 2021

Outlook :

The Barbeque Nation IPO is coming at a time when the COVID-19 pandemic has made many restaurants unviable. Food orders can meaningfully increase and the share of trusted brands is bound to go up vs random mom-pop restaurants that may not be able to assure hygiene.

The restaurant chain has seen compounded annual growth of 14.29%. It has grown from ₹68.60 Crore in FY17 to 89.60 Crore in FY19.

The company is backed by private equity investor CX Partners and ace investor Rakesh Jhunjhunwala’s investment firm Alchemy Capital. Alchemy Capital bought about a 3.5% stake in Barbeque-Nation Hospitality for ₹90 Crore last year.

It also acquired a 61.35% stake in Red Apple Kitchen, which owns Toscano, a casual dining Italian restaurant chain that has ten outlets operating across Bengaluru and Chennai.

Earlier in December last year, Jubilant Foodworks, which operates fast-food chains Domino’s Pizza and Dunkin’ Donuts in India, had acquired a 10.76 percent equity stake into Barbeque-Nation Hospitality Ltd (BNHL) Rs 92 crore.

Barbeque Nation also launched UBQ through its existing kitchen infrastructure, in November 2018 to provide a la carte Indian cuisine in the value segment, which is also being availed by delivery across 71 cities in India.

The restaurant & hospitality sector, despite being amongst the worst hit due to COVID 19 has tremendous potential in a growing economy like India.

With the rise of nuclear families, changing habits, and increasing urban population with higher disposable income coupled with strong growth of food-related e-commerce platforms, a strong branded player like Barbeque Nation stands to gain in the future. IPO could attract a lot of interest among both retail & institutional investors leading to a strong listing.

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