QSR chain Devyani, Cement major Nuvoco get SEBI Okay for IPOs

Nuvoco targets to raise Rs 5,000 cr, Devyani Rs 1,400 cr

Yum brands franchisee Devyani International and building material major Nuvoco Vistas Corporation have received market regulator SEBI comments for IPOs

MUMBAI, July 19 (The CONNECT) - Yum brands franchisee Devyani International and building material major Nuvoco Vistas Corporation Limited have received market regulator Securities and Exchange Board of India’s (SEBI) comments for their IPOs.

Devyani International Limited (DIL), the largest franchisee of Yum Brands, operates core brands such as Pizza Hut, KFC, Costa Coffee besides its own brands such as Vaango, Food Street, Masala Twist, Ile Bar, Amreli and Ckrussh Juice Bar having 692 stores in 26 states across 155 cities in India as well as in Nepal and Nigeria.

Nuvoco’s public offer comprises of a Rs 1500 crore fresh issuance of shares and an Offer for Sale aggregating up to Rs. 3500 crores by the promoter selling shareholder.

As stated in the DRHP, out of the net proceeds the company looks to deleverage its balance sheet by paring off Rs. 1350 crores of certain borrowings availed by the company besides general corporate purposes. The company had filed its DRHP with SEBI on May 06, 2021

Nuvoco Vistas, in terms of its manufacturing capacity is the 5th largest cement company in India and the largest in East India. It also is one of the leading ready mix concrete manufacturers and has grown from being a cement focused entity to now a building materials company offering more than 50 products such as cement, ready mix concrete and modern building materials sold under well-established brand names such as Concreto, Duraguard, Double Bull, ZeroM and Instamix.

As of December 31, 2020 its 11 integrated, blending units across East and North India had an installed cement manufacturing capacity of 22.32 MMTPA. Additional expansion of 1.5 & 1.2 MMTPA is underway at its Jojobera and Bhabua plants. Post-acquisition of Nu Vista and merger of the Nimbol cement plant, the company’s installed capacity in percentage terms doubled over the last 5 years to make it the fastest growing cement company in terms of capacity addition. 

Between FY18-20, the company’s EBITA and PAT for the year grew at CAGR of 9% and 68.7% respectively.

With the Central government’s focus on roads, railways, urban infrastructure and irrigation the share of cement demand is expected to increase from 23 to 25% in Fiscal 2021 to 25 to 27% in Fiscal 2026. 

Key brokerage houses like Prabhudas Lilladher and Reliance Securities say that all-India average price is expected to have improved by strong 5.2% quarter-on-quarter (up 1.5% year-on-year) in first quarter of FY22E, mainly aided by sharp improvement in Southern region (up 9.9% QoQ), Eastern (up 7.4% QoQ) and Western (up 5.8% QoQ). This was despite the second covid wave and localized lockdowns.

ICICI Securities Ltd, Axis Capital Limited, HSBC Securities and Capital Markets (India) Private Limited, JP Morgan India Private Limited and SBI Capital Markets Limited are managing the issue.

Devyani International, which filed its DRHP on May 19, 2021, looks to raise Rs 400 crs via issuance of fresh equity shares and an Offer of Sale of up to 125,333,330 equity shares by Investor Selling Shareholder, Dunearn Investments (Mauritus) Pte. Ltd, a wholly owned subsidiary of Temasek Holdings and Promoter Selling Shareholders, RJ Corp Ltd. 

As per market sources, the company plans to raise Rs 1400 Cr.

DIL commenced its relationship with Yum in 1997 with its first Pizza Hut store in Jaipur, it is also a franchisee of the Costa Coffee brand and currently operates 297 Pizza Hut stores, 264 KFC stores and 44 Costa Coffee as on March 31, 2021 in India. Between March 2019-2021 the core brand stores saw a CAGR growth of 13.58% from 469 stores to 605 stores and the company attributes its success and continuous growth effort to its 9,356 employees.

 Devyani is the single largest QSR company in India to be listed on Swiggy and was amongst the largest QSR company in India be to listed on the Zomato platform in 2019 and 2020. It is expected that the sale value of the QSR industry will grow at a CAGR of 12.4% between 2020 – 2025. In FY21 Devyani’s business from the core brands (India & Internationally) accounted for 94.19% of its revenues from operations and delivery sales represented 70.20% of the said revenues, an increase from 51.15% in FY20.

Despite the pandemic, it has continued to expand its store network and has opened 109 stores across its core brand business in the last 6 months. KFC and Pizza Hut were amongst the earliest to roll out contactless delivery in May 2020 and June 2020, respectively.

 Kotak Mahindra Capital Company Ltd, CLSA India Pvt Ltd, Edelweiss Financial Services Ltd and Motilal Oswal Investment Advisors Ltd are the managers to the issue.

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