Hi, another IPO is coming from Barbeque nation, and today we will discuss it in detail. This article will be divided into 7 parts starting from the Objective of the IPO, industry, the company. Then about the financials, pros and cons, and important dates of the IPO.
Barbeque Nation IPO Review
Let's start by looking at the objective of the IPO.
The first reason being to pay all the outstanding loans/ borrowings with this IPO money.
The second reason is to use this money to meet general corporate purposes.
Let's now talk about the industry. BBQ Nation operates in the foodservice industry which has come a long way from 1980s. In the 1980s this industry was dominated by unorganized brands. The change came in 1996 when McDonald's, Pizza Hut, Dominos entered followed by Subway and BBQ Nation and after the 2000s, Indian chains like Haldirams and Moti Mahal had a huge growth.
Since then the industry is growing due to investments from domestic and international brands And since then, many foodservice providers have been able to procure efficiency in front end and backend. Reasons being an increase in disposable income, better quality labor, use of technology, etc
From 2015 till now, how the foodservice market has grown and the projections till 2025. The green segment represents the chain market segment and the major contribution is by quick-service restaurants like McD, CCD And the second most is casual dining like Made in Punjab, Pind Balluchi.
In 2020, the market size of casual dining is estimated at 134 billion rupees and is expected to grow by 18% CAGR and be at 302 billion rupees in 2025. COVID 19 impacted the dining industry very hard as people stopped going out and eating due to which they had to start home delivering from which they were able to run their business shortly after the lockdown. Around July/August when restaurants started opening up, sales were more too Restaurants like BBQ Nation started home delivering which gave them an additional revenue stream.
Let's now talk about the company. It was incorporated in 2006 and is the leading casual dining restaurants in India. The food, ambience and service are the best. And they own Toscano and UBQ which cater to the delivery segment.
Rakesh Jhunjhunwala led Alchemy India bought 575000 at Rs 827 per share on 29th March 2018 and total stake is 1.69%.
The first BBQ Nation opened in 2008 and now they have 147 restaurants in 77 cities and 6 international in 3 countries. The company diversified into another brand by acquiring 61.35% of Red Apple and this was done on a full dilution basis meaning when one company acquires the other, the EPS of that company declines. Red Apple operates 11 Italian restaurants in Bengaluru, Chennai, and Pune.
According to the report by Great places to work in 2020, BBQ Nation also secures a place in the top 10 retail companies. The total owned and operated BBQ Nation restaurants are increasing with the total cities too.
In the restaurant terminology, there is a term called 'cover' meaning a meal For example, dishes served in appetizers, main course, desserts and drinks are as a whole considered to be cover and if someone else goes with me, the food consumed individually will be considered covers.
From 2017 till 2020 how the number of covers has increased with avg price per customer rising too Future strategies are to grow in revenue and profits, expansion in more cities and to evaluate more brand acquisitions As you can see the financials of the company, The PB ratio is 125.59, Price to sales is 1.65, and the market cap is 1400 Cr, The net profit margin is -42.54% and ROE is 295.40%. The debt to equity ratio is 14.80 and the current ratio 0.16.
Pros of investing
Let's now talk about the pros of investing.
First is the growth of casual dining restaurants with BBQ Nation being one of the fastest-growing and widely recognized, The company started in 2008 and now has 147 restaurants.
The second is the avg price per customer is high and most of the revenue comes from weekday sales and lunch covers and usually the revenue of these restaurants comes from weekend sales and dinner covers.
The third reason is the continuous growth in revenue from 590 Cr to 850 Cr before covid.
The fourth point is being customer-centric and bringing new offers and dishes for them in fact this is one of the first companies who introduced barbeques on the table itself.
Cons of investing
Let's now talk about the cons of investing.
The first being, they were loss-making even before covid.
The second is debt to equity being 14.8 and a current ratio of 0.16 in FY20 and is at high risk for liquidity and solvency.
The third is many legal cases on the company with a liability of 17 Cr.
The next point is in FY20, 38% of the revenue came from Delhi NCR, Mumbai and Bengaluru and even in these past 8 months, 30% of the revenue is from these same metro cities meaning the company heavily relies on metro cities for its revenue.
The next is heavy competition from organized as well as unorganized brands and no brand loyalty by the customers
important dates of the IPO
Let's now discuss some of the important dates to keep in mind before investing. The bidding starts from 24th March till 26th March 2021.
The tentative listing date is April 7th but can be changed anytime by the company and if this happens we will update you time to time
Barbeque Nation IPO Price
The price band for bidding has been kept between Rs 498 to 500 per equity share and if you want to apply for a lot you need to bid for at least 30 shares.
The total IPO size is 452.87 Cr, with a fresh issue of 180 Cr and offer for sale at 272.87 Cr.
We make all article for educational purposes so that we can deliver the right information. You can further do your own research, invest for the long term and make good returns.
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