Barbeque Nation Hospitality Limited

Started in 2006, Barbeque Nation Hospitality Limited owns and operates Barbeque Nation Restaurants, one of India's leading casual dining restaurant chains. BNHL has steadily grown its owned and operated Barbeque Nation Restaurant network from a single restaurant in Fiscal 2007 to 147 Barbeque Nation Restaurants in 77 cities in India (including one currently under renovation) and one restaurant in Dubai as of December 31, 2020. Through its Barbeque Nation Restaurants, BNHL pioneered 'over the table barbeque' concept in Indian restaurants. Live grills embedded in dining tables allow its guests to grill their own barbecues. Company also periodically runs popular food festivals at its Barbeque Nation Restaurants offering its guests a range of Indian, international and fusion cuisines. BNHL is one of the few Indian companies in the organized Casual Dining Restaurant ('CDR') segment to have their own in-house chef training school for development of new products. BNHL have recently diversified into another brand pursuant to our acquisition of 61.35% of the equity share capital on a fully diluted basis of Red Apple, which operates 11 Italian Restaurants in three cities in India, namely Bengaluru, Chennai and Pune. Red Apple, which owns and operates nine restaurants under the brand name, 'Toscano', a casual dining Italian restaurant chain and operates one restaurant each under the brand names 'La Terrace' and 'Collage' respectively. Of the Italian Restaurants operated by BNHL as of November 30, 2019, two Toscano Restaurants were opened since March 31, 2019 whereas four Toscano Restaurants were opened in the three Fiscals immediately preceding Fiscal 2019. Company's acquisition of Red Apple has enabled BNHL to diversify the brand, cuisine and customer segment beyond company's flagship concept of 'over the table barbeque'. As per financial performance, BNHL has posted total income/net profits of Rs. 590.44 cr. / Rs. (6.52) cr. (FY18), Rs. 742.54 cr. / Rs. (40.71) cr. (FY19) and  Rs. 850.79 cr. / Rs. 35.57 cr. in FY20. For 8 months of FY21, it has reported net profit of Rs. (98.55) cr. on total revenue of Rs. 236.60 cr. So company has posted consistent high sales growth over last couple of years, but not able to generate profit. Company has posted an average EPS of Rs. (8.30) and average RoNW of (288.68)% for last three fiscals. Issue is priced at a P/BV of (93.81) as per NAV of (5.33) As on 31.11.20. As per FY20, earnings are negative so we can not calculate P/E. As per RHP, comparison between the listed peers are shown in above table.  On BRLM's front, four BRLMs are associated with this IPO, and have handled around 32 IPO in last three fiscals. From last 10 IPOs, 3 are opened below issue price and remaining are opened above issue on the day of listing. As of now, 3 are trading below issue price and remaining are trading above issue price. ( As on 22.03.2021) As per financials, sales of BNHL are improving, but company has posted losses since FY18 and NAV of company is also negative. In first 8 months of FY21, performance of company hit very hard due to pandemic and next 6-8 months may be similar. Debt of company is higher and just before 3 months, company has issued equity (nearly 18% of pre-issue equity) at Rs 252 and now valuation is almost double, which doesn't seem fair. Performance of BRLMs are average, So we give AVOID rating to this IPO.

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