Barbeque Nation refiles IPO draft with SEBI

Bangalore-based, Barbeque Nation Hospitality Limited (BNHL), the single largest player in the organised dining space has refilled a fresh Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an Initial Public Offering (IPO). It comprises a fresh issue of shares of Rs 275 crore and an offer for sale of up to 98,22,947 equity shares. The company may consider a pre-IPO placement not exceeding Rs 150 crore, as stated in the DRHP.

The promoters of BNHL are Sayaji Hotels, Sayaji Housekeeping Services, Kayum Dhanani, Raoof Dhanani, Suchitra Dhanani and are backed by private-equity investor, CX Partners, which made its first investment in 2013 and again in 2015.

Promoter and Promoter Group holds 60.24 per cent, CX Partners owns 33.28 per cent and renowned stock market investor Rakesh Jhunjhunwala's investment firm Alchemy Capital holds 2.05 per cent in the company owned and operated restaurant chain.

IIFL Securities Limited, Axis Capital Limited, Ambit Capital Private Limited and SBI Capital Markets Limited are the Book Running Lead Manager (BRLM) to the issue.

Up to 50 per cent of the offer will be available for allocation to Qualified Institutional Buyers (QIBs). Further, up to 15 per cent of the offer shall be available for allocation on a proportionate basis to non-institutional bidders and 35 per cent of the offer will be available for the allocation to retail individual bidders.

According to market sources, the issue size will approximately be between Rs 1,000-1,200 crore. The proceeds of the issue will be utilised to repay an outstanding borrowing of Rs 205 crore in part or full and general corporate purposes. In FY19, the company had incurred a finance cost of around Rs 56.4 crore, which is significantly considering the EBIT of ~Rs 93 crore as most of the operating profit is going in servicing the company’s debt. Thus, reduction plan is likely to aid company’s profitability.

As a part of its expansion plans, BNHL which pioneered the format of over the table barbeque concept in Indian restaurants has diversified itself, the cuisine offered and customer segment outreach by recently acquiring 61.35 per cent stake in Red Apple Kitchen, which owns a well-established brand, Toscano, a casual dining Italian restaurant chain, which currently has 10 outlets operating across Bengaluru and Chennai. Additionally, through its existing kitchen infrastructure, it launched UBQ in November 2018 to provide a la-carte Indian cuisine in the value segment, which is currently being availed by delivery across 71 cities.

The consolidated total revenue from continuing operations increased to Rs 742.5 crore in FY19 from Rs 498.5 crore in FY17. EBITDA during the same period grew to Rs 149.4 crore from Rs 121.7 crore. However, in terms of bottom-line the, company posted a net loss of Rs 38.3 crore in FY19 as against Rs 3.9 crore net profit in FY17.

Since its earlier filing in August 2017, the fast-growing restaurant chain has opened up 59 new outlets and is currently, operating 138 outlets across 78 cities in 24 states of India and seven outlets in UAE, Oman and Malaysia. The restaurant has seen 14.29 per cent CAGR increase in its dining covers in India, which has grown from 6.86 million in FY17 to 8.96 million in FY19, pillared by referrals and recommendations of customers.