Devyani International Limited saw a healthy demand and subscription from investors on day 1 of the initial public offering (IPO). On the first day of the public issue opening, it was subscribed 2.69 times on August 4, 2021, at approximately 17:00 IST. The IPO is set to close its subscriptions on August 6. The offer had received bids for 30.26 crore equity shares against the IPO size of 11.25 crore equity shares. The IPO size was also reduced from the earlier 20.42 crore equity shares to the now 11.25 crore shares. This comes after the company managed to raise Rs 824.87 crore from anchor investors a day before the opening of the issue, on August 3. The company had essentially done this by allotting 9.16 crore shares to 63 anchor investors before the IPO.
The retail segment of investors saw the highest level of subscription to the IPO relative to the other investor categories. The retail investors on day 1 of the IPO had subscribed a total of 11.37 times their reserved portion. The qualified institutional buyers (QIBs) had subscribed to the issue a total of 0.77 times against their reserved portion. The non-institutional investors had also subscribed to the issue the same 0.77 times against their allocation. On the other hand, the issue did see the employees also subscribe to the issue a total of 1.56 times by the end of the first day.
In terms of reservations made for the IPO before it opened, the QIB category had the highest reserved portion that stood at 75 per cent. The NII category had a 15 per cent reservation and the retail investors had 10 per cent set aside for them.
The Devyani International IPO has an issue size of Rs 1,838 crore. The issue comprises of a fresh issue worth Rs 440 crore and an offer for sale (OFS) of Rs 1,398 crore with 155,333,330 equity shares with a Rs 1 face value. The price band of the IPO was set at Rs 86 to Rs 90 per equity share. Devyani International is seeking to hit a market valuation of Rs 10,823 crore at the upper end of this price band.
The grey market premium of the issue stood at Rs 60 on August 4, at approximately 07:30 IST as listed on IPO watch. This indicated that the shares were trading at a premium of Rs 146 to Rs 150 per equity share on the unlisted market.
Speaking on the way forward for Devyani International, Ajit Mishra the VP of Research from Religare Broking said, “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 company plans to use the proceeds from its public issue to fund repayments and pre-payments for the company’s borrowings, which it will do fully or partially. The rest of the funds will go towards general corporate expenses. Devyani International is likely seeking an allotment date of August 11 and a listing date of August 16, which is yet to be confirmed.
In a note, ICIC Direct recommended that investors subscribe to the issue of Devyani International Limited as it would be able to capture growth in the market going forward. “We believe DIL would be able to capture the growth owing to metro lifestyle and outside food habits. This, coupled with the company’s cost rationalisation initiatives will help drive profitability in future. We recommend SUBSCRIBE to the issue,” said ICICI direct.