Companies raised Rs 15,774.2 crore through 19 IPOs in the December quarter, marking their plan to step up business as India’s economy recovered from the devastation of the coronavirus pandemic. Now, startups, state-owned companies and big-ticket brands all plan to list, continuing a trend that raised about Rs 7,375 crore in January. Akash Podishetty evaluates six companies that are planning to bring their IPOs.
Akash Podishetty | Business Standard
Initial public offerings (IPOs) lost steam when India locked down for weeks last March to contain the spread of the coronavirus pandemic. The Securities and Exchange Board of India (Sebi), the market regulator, allowed companies to extend their IPO deadlines and change fresh issue size by up to 50 per cent of the earlier estimate without fresh paperwork. That helped.
Companies raised Rs 15,774.2 crore through 19 IPOs (Initial Public Offers) in the December quarter, according to a report by EY India. The IPO market in January had its best start in almost 12 years, with companies raising about Rs 7,375 crore, according to a Business Standard report late January. Companies that had IPOs in January include Indian Railway Finance Corporation (to raise Rs 4,633 crore), Indigo Paints (Rs 1,176 crore), Home First Finance (Rs 1,154 crore) and Stove Kraft (Rs 413 crore).
The IPO rush continues. The retail arm of oil-to-telecom conglomerate Reliance Industries will go public. Start-ups like Paytm, PhonePe, Nykaa and Zomato will list too. Lodha Developers, a real estate company, and Barbeque Nation, a restaurant chain, plan launches. The liquidity burst, coupled with favourable valuations, is an investment opportunity.
Of the many companies about to go public, Business Standard picked six--Barbeque Nation, Kalyan Jewellers, Nykaa, Lodha Developers, Apeejay Surrendra Park Hotels Limited, and Lite Bite Foods --- to track their performance.
Barbeque Nation Hospitality Ltd. (BNHL), which introduced India to live-grill restaurant dining, aims to raise between Rs 1,000 crore and Rs 1,250 crore through its IPO. The company will use the proceeds to cut Rs 205 crore in debt. The IPO comprises a fresh issue of shares worth Rs 275 crore, and the company may consider a pre-IPO placement of Rs 150 crore.
The Bengaluru-based company refiled its draft red herring prospectus (DHRP) with Sebi last year. It tried for an IPO in 2017 and got Sebi’s approval too, but didn’t proceed due to adverse market conditions. The company has 148 restaurants across India and abroad, including 21 opened in Financial Year 2019-2020 (FY20). As many as 75 of them are located in metro cities, 21 in tier-I and 39 and six in tier-II and tier-III cities. South India is the company’s largest market. It operates seven restaurants in the UAE, Oman and Malaysia. The company has launched a new brand called ‘Barbeque in a Box’ to deliver food.
Three promoters together hold more than 55 per cent stake in the company: Sayaji Housekeeping Services Ltd. about 45 per cent, Kayum Dhanani, the managing director, about 5 per cent, and Suchitra Dhanani, a director, about 4.64 per cent. The firm is backed by CX Partners' Tamara Private Ltd. (holding about 21.72 per cent stake), Pace Private Ltd (about 11.37 per cent) and investor Rakesh Jhunjhulwala-backed Alchemy India (2.05 per cent).
Jubilant FoodWorks, which operates Domino’s Pizza and Dunkin’ Donuts in India, said in December it is acquiring a 10.8 per cent stake in the company for Rs 92 crore. Barbeque Nation's consolidated revenue increased 14 per cent year-on-year in FY20 at Rs 850 crore. Revenue was Rs 742 crore in FY19. The company reported a 12 per cent rise in EBITDA at Rs 168 crore for FY20, compared with Rs 149 crore in FY19. Loss in FY20 narrowed to Rs 33 crore, compared with Rs 38-crore loss in FY19.
Nykaa, an online beauty and wellness retailer, is considering an IPO valued at nearly $3 billion (Rs 26,836 crore) this year, according to multiple reports. Nykaa—founded by former banker Falguni Nayar in 2012—works with more than 1,400 brands to sell makeup, skincare, health supplements and hair dryers. The company says it monthly gets 5.5 million visitors on its website from all over the world. When India locked down late March in 2020, Nykaa bagged Rs 100 crore in funding from existing investor UK-based Steadview Capital.
Boston-based Fidelity Management and Research invested an undisclosed amount through a secondary transaction in the latest funding round in November 2020. The company has $145.9 million in funding over 12 rounds, according to Crunchbase website. Film star Alia Bhatt, Hero group chairman Sunil Munjal and investment firm TPG have invested in the company. Nykaa reported a revenue of Rs 1,860 crore for FY20: a jump of more than 60 per cent year-on-year compared to Rs 1,159 crore in FY19. Nykaa reported nearly ten-fold jump in its operating profit at Rs 94 crore in FY20. The company turned profitable in FY19 with a net profit of Rs 2.3 crore as the revenues exceeded the expenses. Nykaa expects the revenue to grow by 40 per cent in FY21.
Macrotech Developers, one of India's largest real estate companies that was formerly Lodha Developers, filed its draft IPO papers after trying two times before in 2009 and 2018. The company seeks to raise around Rs 2,500 crore. Around Rs 1,500 crore of the proceeds will be used to reduce aggregate borrowing on a consolidated basis.
The company--founded in 1995 by Mangal Prabhat Lodha--owns residential and commercial estate in the Mumbai Metropolitan Region, Pune and London. It entered the UK market in 2013 by acquiring the MacDonald House building at 1 Grosvenor Square in Central London for more than Rs 3,100 crore (306 million pounds) .
As of December 31, 2020, the company has 91 completed projects comprising approximately 77.22 million square feet of developable area. It has 36 ongoing projects comprising around 28.78 million square feet of developable area. According to latest regulatory filings, the company earned Rs 2,915 crore as consolidated revenue from operations for the nine months ended December 2020, down 68 per cent from Rs 9,272 crore in the year-ago period. The company reported a loss of Rs 264 crore during the nine months compared to a profit of Rs 503 crore in the same period a year ago. It clocked Rs 3,351 crore from sales in the nine months ended December period and the gross collections stood at Rs 2,893 crore.
For FY20, consolidated revenues grew by 4.6 per cent year-on-year to Rs 12,486 crore compared to Rs 11,936 crore in FY19. Net profit for the year declined by 55 per cent year-on-year to Rs 742 crore. It was Rs 1,647 crore in the previous financial year. The Mumbai-based company's sales in India declined to Rs 6,570 crore in FY 2019-20 from Rs 7,163 crore in the previous financial year. Sales in million square feet (mn.sq.ft.) stood at 6.2 mn.sq.ft in FY20 and number of units sold were 5,912 during the year
As of December 2020, the company's total debt stands at Rs 18,662 crore. Last March, the company’s UK arm raised $200 million (around Rs 1,473 crore) by issuing bonds in the Singapore market to pare part of the debt.
Apeejay Surrendra Park Hotels
Apeejay Surrendra Park Hotels (ASPH) runs luxury boutique hotels across India and filed draft papers with Sebi in December 2019 for an IPO, getting the regulator’s approval in March last year.
The plan has a fresh issue of Rs 400 crore and an offer-for-sale (OFS) of Rs 600 crore. The proceeds will be used to repay Rs 300 crore in loan and for operations. Sebi’s approval ends on March 8. The company has said it plans to apply for an extension, considering the pandemic’s impact.
ASPH has a contract to manage, but not own, 320 hotel rooms across its four brands: Park Hotels, Park Collection, Zone by The Park and Zone Connect. The company seeks a 26-per cent CAGR (compounded annual growth rate) in inventory in three years: that would mean adding 1,536 rooms to its portfolio to take the total up to 3,473, according to Vijay Dewan, the company’s managing director.
The company owns about 60 per cent of its total properties and manages about 40 per cent of them. In three years, it plans to reverse the order and have more managed properties. The company's consolidated revenues rose marginally in FY20 at Rs 442 crore from Rs 431 crore in FY19. Operating profit or EBITDA for FY20 came in at Rs 95.38 crore, up from Rs 91.83 crore in FY19. Meanwhile the company's net profit more than doubled in FY20 at Rs 24.21 crore, compared with Rs 10 crore in FY19. As of FY20, the company’s total debt was Rs 540 crore.
Kalyan Jewellers has filed for a Rs 1,750-crore IPO: the biggest share offer in jewellery. The company will use the proceeds for working capital and other requirements. The IPO will include fresh equity sale of up to Rs 1,000 crore and an offer for sale (OFS) worth Rs 750 crore. The company’s promoters together hold about 71.74 per cent of equity (combined): TS Kalyanaraman (27.41 per cent), T K Seetharam (22.17 per cent) and T K Ramesh (22.17 per cent). Highdell Investment Ltd has about 24 per cent stake. T S Kalyanaraman, the company's founder and chairman, would offload shares worth Rs 250 crore, while Highdell Investment Ltd would sell up to Rs 500 crore worth of shares through the OFS route.
The Thrissur-based company operates more than 100 stores in India and 30 in the Middle East, competing with listed jewellery companies Titan and PC Jeweller. Kalyan’s revenue from operations increased to Rs 10,100 crore in FY20 from Rs 9,770 crore in FY19. Revenue was Rs 10,547 crore in financial year 2017-18 (FY18). Net profit came in at Rs 142 crore for FY20 as against a loss of Rs 4.8 crore in FY19. The company, which was set up in 1993, reported a profit of Rs 140.9 crore for FY18. As of March 2020, the company's total borrowings stand at Rs 3,640 crore.
Lite Bite Foods
Lite Bite Foods Pvt. Ltd., a restaurant company promoted by Dabur group chairman Amit Burman, owns 22 brands and manages nine. Its brands include restraint chains Punjab Grill, Hanh's Kitchen, Asia Seven, Zambar, Tres and You Mee.
It has more than 130 stores across the world in malls, airports, office complexes, and hotels. At airports, Lite Bite has set up KFC, Burger King and other stores on the franchise model. Lite Bite, which was set up in 2002, began cloud kitchens in Delhi in September 2020 and expanded the business to Mumbai in December. The company's revenue increased 13 per cent on a year-on-year basis at Rs 491 crore for the financial year ended March 2020, compared with Rs 434 crore in FY19. Loss widened in FY20 to Rs 210 crore from Rs 110 crore the previous financial year. Total expenses in FY20 stood at Rs 709 crore.
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