The initial public offering (IPO) of causal dining restaurants chain Barbeque Nation Hospitality was subscribed 1.98 times on March 25, the second day of the bidding process. Investors have put in bids for 98.75 lakh equity shares against the offer size of 49.99 lakh shares, as per subscription data available on the exchanges.

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The reserved portion for retail investors has been subscribed 9.66 times, while that of non-institutional investors is subscribed 10 percent at end of day. Employees’ portion is subscribed 70 percent, while qualified institutional buyers' part was subscribed 37 percent. The company has reserved shares worth Rs 2 crore for its employees.

The issue size has been reduced to 49.99 lakh equity shares from 90.71 lakh equity shares after the company raised Rs 203 crore from 15 anchor investors on March 23 ahead of the issue opening. The company had allocated 40.6 lakh equity shares at Rs 500 per share to the anchor investors.

Barbeque Nation Hospitality owns and operates Barbeque Nation Restaurants, one of India’s leading casual dining restaurant chains and International Barbeque Nation Restaurants.

The IPO comprises a fresh issue of equity shares aggregating up to Rs 180 crore and an offer for sale of up to 54,57,470 equity shares by existing selling shareholders. The company plans to raise Rs 452.87 crore through the issue.

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The company will utilise the net proceeds from the issue for expansion and opening of new restaurants, prepayment or repayment of all or a portion of certain outstanding borrowings and general corporate purposes.

IIFL Securities, Axis Capital, Ambit Capital and SBI Capital Markets are the book-running lead managers to the issue.

Most brokerages are not very bullish on the issue due to consistent losses in previous years and also the impact of COVID-19 on the dine-in business. However, the company has shown a smart recovery of 84 percent of pre-COVID levels with an improving business outlook.

Brokerages believe the long-term growth story for the company is intact but they are not confident about the listing.

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"While the company has posted revenue growth of 20 percent CAGR between FY18-FY20, it has been continuously incurring losses at PAT level. The COVID-19 pandemic too has had an adverse impact on the operations of the company, hence we expect profits will remain under pressure over the medium term," Angel Broking said.

The higher end of the price band is expensive given the current environment and hence the brokerage recommends a 'neutral' rating.

(Edited by : Abhishek Jha)

First Published:Mar 25, 2021 12:37 PM IST