Devyani International, the largest franchisee of Pizza Hut, KFC and Costa Coffee in India, to hit the IPO market on August 4. The franchisee through the IPO will aim at servicing its long-term debts with the sale of fresh issuance of equity shares.
The IPO comprises fresh issuance of equity shares worth Rs 440 crore by the Company and an offer for sale of up to 155,333,330 equity shares by the selling shareholders, namely Dunearn Investments (Mauritius) and the promoter selling shareholder, RJ Corp Limited. The price band of the IPO is fixed at Rs 86-90 per share. Through this IPO, the company is looking at raising around Rs 1,800 crore.
Commenting on debt of the company, Ravi Kant Jaipuria, non-executive director and chairman, Devyani International said, “The funds that we are collecting is to repay our debt. More than that, we have enough cash flows to support our operations. The cash flow will take care of our needs. Moreover, we will not have to dilute our equity to borrow money.”
Adding to it, Manish Dawar, chief financial officer of the company, said, “The total consolidated debt is around Rs 500 crore which includes debt of standalone and other subsidiary companies. Our endeavour will be to maximise our loan repayment and make the company debt-free.”
However, Dawar added that the company is keeping an eye out on the pandemic. “Depending on the current pandemic condition, we may keep more funds -- looking at the way the third wave of COVID is panning out --and repay a lesser debt. This is because of the uncertain times.”
As of March 31, 2021 and June 30, 2021, the company had total borrowings (consisting of long-term borrowings and short-term borrowings) of Rs 463.32 crore and Rs 396.47 crore respectively, according to the red herring prospectus.
The franchisee, which currently operates 297 Pizza Hut stores, 264 KFC stores and 44 Costa Coffee as of March 2021 in India, has been growing inorganically and organically. In the first quarter the company added around 40 stores, Jaipuria stated the company is reasonably aggressive in terms of adding stores despite the ongoing pandemic.
Meanwhile, Devyani International has continued to report a loss of Rs 94.14 crore, Rs 121.41 crore and Rs 62.98 crore in fiscal 2019, 2020 and 2021, respectively. After repaying the debt the company will be in a positive position, added Dawar.
Devyani International is an associate company of RJ Corp, the largest bottling partner of food and beverages (F&B) major Pepsico. The company is the largest franchisee of Yum Brands, operating core brands such as Pizza Hut, KFC, Costa Coffee. The company also owns brands such as Vaango, Food Street, Masala Twist, Ile Bar, Amreli and Ckrussh Juice Bar.
The company is the single largest quick service restaurant (QSR) company in India to be listed on Swiggy and was amongst the largest QSR companies in India to be listed on the Zomato platform in 2019 and 2020. Due to these partners, the company has been able to see growth in its delivery model as well. During the lockdown year (FY 2021), the company saw 70 per cent of revenues from operations in core brands coming from delivery sales, from 51 per cent in FY 2020.
