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There are some interesting IPOs scheduled to be launched in 2021. One such IPO is the Barbeque Nation Hospitality Limited IPO that is being launched on March 24, 2021. Here is all you need to know about the issue.

Barbeque Nation Hospitality Limited IPO Details

IPO Date March 24, 2021 to March 26, 2021
Issue Type Book Built Issue IPO
Issue Size Equity Shares of Rs.5 totaling up to Rs.452.87 Crore
Fresh Issue Equity Shares of Rs.5 totaling up to Rs.180.00 Crore
Offer for Sale Equity Shares of Rs.5 totaling up to Rs.272.87 Crore
Face Value Rs.5 per equity share
IPO Price Rs.498 to Rs.500 per equity share
Market Lot 30 shares
Min Order Quantity 30 shares
Listing At BSE, NSE

Barbeque Nation Hospitality Limited IPO Tentative Timetable

Bid/Offer Launch date March 24, 2021
Bid/Offer Last date March 26, 2021
Basis of Allotment finalization date April 01, 2021
Initiation of Refunds April 05, 2021
Credit of Shares to Demat Acct April 06, 2021
IPO Shares Listing Date April 07, 2021

About the Company – Barbeque Nation Hospitality Limited

Barbeque Nation Hospitality Limited owns and operates Barbeque Nation Restaurants, one of India’s leading casual dining restaurant chains, and International Barbeque Nation Restaurants. It also owns and operates Toscano Restaurants and UBQ by Barbeque Nation Restaurant. The company strives to offer a one-of-a-kind customer experience via the nature and quality of its food offerings and the ambience and service of its restaurants.

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Barbeque Nation is the pioneer of the format of ‘over the table barbeque’ concept in Indian restaurants. Live grills embedded in dining tables allow the guests to grill their own barbecues. The company believes that its restaurants, compared to other fixed-price dining options, offer competitive attractions such as a wide range of vegetarian and non-vegetarian appetizers and main courses, a popular dessert menu, a pleasant and casual dining environment, and prompt service thereby making it a popular destination for celebrations.

The company also periodically runs popular food festivals at its restaurants offering its guests a range of Indian, international, and fusion cuisines.

1. Growth Story of Barbeque Nation Hospitality Limited

The company was initially incorporated as Sanchi Hotels Private Limited in 2006 and launched the first Barbeque Nation restaurant at Pali Hill, Mumbai. In 2007, the company opened restaurants in Indira Nagar and Kormangala (Bengaluru), and Banjara Hills (Hyderabad). The company’s name changed to Barbeque Nation Hospitality Private Limited in 2008 and converted into a public company a month later. Also, in 2008, it started its first restaurant in T Nagar, Chennai. By 2012, the company had opened its 25th Barbeque Nation restaurant in Mumbai.

In 2013, the company received investment from CX Partners Fund I Limited through TPL and investment by AAJVIT. Over the next two years, the company introduced the concepts of Live Counters and Kulfi Nation across its restaurants. By 2016, the company launched its 75th restaurant in India and the first Barbeque Nation restaurant in Dubai. In 2018, it received investment from Alchemy India and Partner Reinsurance and expanded its international footprint in the Asia Pacific region by setting up a Barbeque Nation restaurant in Kuala Lumpur, Malaysia.

It also opened its 100th restaurant in Dimapur, Nagaland, and launched UBQ by Barbeque Nation to provide a la carte Indian cuisine in the value segment. By 2020, the company had 149 restaurants, increased its international presence, and launched “Barbeque-in-a-Box”, a product offering available online.

2. Financials of Barbeque Nation Hospitality Limited

Here is a quick look at the financial performance of Barbeque Nation Hospitality Limited over the last three years:

Mar 2020 Mar 2019 Mar 2018
Total Assets 955.46 819.09 723.16
Total Income 850.79 742.54 590.45
Total Expenses 682.75 593.15 450.08
Profit After Tax -32.93 -38.39 -5.80

All amounts in INR Crore

A quick glance at the financial performance of Barbeque Nation over the last three years offers the following insights:

  • The company has booked losses over the last three years
  • The total revenue of the bank grew at a CAGR of 20.04% between 2018 and 2020.
  • The total assets grew at a CAGR of 14.94%.

SWOT Analysis

In India, the food services market has evolved since the 1980s when there were more unorganized players than organized players. In 1996, this sector experienced a major change with the opening of restaurants by McDonald’s, Pizza Hut, and Domino’s, followed by the entry of players like Subway and Barbeque Nation, and the expansion of legendary home-grown players like Haldirams and Moti Mahal.

In FY 2020, the size of the food services market in India is estimated at Rs 4.23 lakh crores and is projected to grow at a CAGR of 9% over the next 5 years to reach Rs 6.51 lakh crores by FY 2025. The organized market (chain and organized standalone outlets, excluding Restaurants in Hotels) is estimated at Rs 1.6 lakh crores in FY 2020 and is projected to grow at a CAGR of 15%, to reach Rs 3.2 lakh crores by FY 2025.

In FY 2021 due to COVID, the food services market is expected to show a dip of 53% in comparison to that in FY 2020. Similarly, in FY 2021, Chain market is expected to show a dip of 42% in comparison to FY 2020.

1. Strengths of Barbeque Nation (SSFB) Limited

  • Barbeque Nation Hospitality Limited is one of India’s fastest-growing and widely recognized restaurant brands in the rapidly growing Casual Dining Restaurant market.
  • The company has experienced steady growth in covers and consistent average price per customer with a relatively high proportion of total revenues from weekday sales and lunch covers.
  • Barbeque Nation has attractive offerings based on constant menu innovation and customer focus.
  • The company has benefited from strong processes and systems that have been established over 14 years of its operation. The restaurant locations are carefully chosen by a dedicated internal team. It has been successful in opening Barbeque Nation Restaurants in popular business districts, neighborhoods, and local markets without typically paying high street premium rentals.
  • The company has experienced staff and value-oriented business culture led by some of its Promoters and the senior management team bringing experience from well-known hospitality brands.

2. Weaknesses of Barbeque Nation Hospitality Limited

  • Barbeque Nation has been aggressively trying to expand into newer markets putting a strain on its margins. This has also resulted in a negative free cash flow position.
  • The company operates in a highly competitive market which restricts the pricing flexibility of the company to a certain extent impacting its realizations.

3. Peer Comparison

Here is a quick look at the performance of Barbeque Nation in comparison to its peers (according to the RHP) on some key aspects for FY 2020. 

Profit After Tax Debt to Equity Ratio Return on Net Worth (RoNW)
Barbeque Nation Hospitality Limited -32.93 41.41% -556.59%
Jubilant Foodworks Limited 278.80 23.51%
Westlife Development Limited 36.59 0.31% -1.27%
Speciality Restaurants Limited -38.16 -23.20
Burger King India Limited -76.57 0.85% -26.22%

All amounts in INR Crore

As you can see, compared to its listed peers, Barbeque Nation has a very low return on net worth (RoNW).

4. Opportunity to Investors – Valuation of the IPO

Let’s look at the valuation factors of Barbeque Nation in comparison with its peers:

Earnings Per Share (diluted) P/E Ratio
Barbeque Nation Hospitality Limited -11.77
Jubilant Foodworks Limited 21.22 140.05
Westlife Development Limited -0.47 Negative
Speciality Restaurants Limited -8.09 Negative
Burger King India Limited -2.87 Negative

As per the peer group selected by Barbeque Nation in the RHP, the average PE Ratio is 140.05. Since its EPS is negative, PE ratio is negative too and hence cannot be computed.

5. Risk Factors

  • The outbreak of the 2019 novel coronavirus (“COVID-19”) pandemic, as well as GoI measures to reduce the spread of COVID-19, have had a substantial impact on the company’s restaurant operations and the timing of how long the COVID- 19 pandemic and the related GoI measures will last is still uncertain.
  • If there is deterioration in the performance of, or its relationships with, third-party delivery aggregators, then the company’s business, results of operations, and financial condition can be impacted.
  • If Barbeque Nation is unable to implement its growth strategy successfully including in relation to selecting cities and locations for its new restaurants, its results of operations and financial condition may be adversely affected.

6. Objects of the Offer

Barbeque Nation Hospitality Limited proposes to utilize the net proceeds from the fresh issue for:

  • Capital expenditure for expansion and opening of new restaurants by the Company;
  • Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company on a consolidated basis; and
  • General corporate purposes

7. Promoter/s of Barbeque Nation Hospitality Limited IPO

  1. Sayaji Hotels Limited
  2. Sayaji Housekeeping Services Limited
  3. Kayum Dhanani, Raoof Dhanani and Suchitra Dhanani

How Can You Apply For the Barbeque Nation Hospitality Limited IPO?

You can apply for the Barbeque Nation Hospitality Limited IPO by using one of these two methods of payment:

  1. ASBA – available via the net banking interface of your bank account. Almost all banks offer this facility
  2. UPI – available with brokers who do not offer banking services. 

Things to Keep In Mind Before Investing In the Barbeque Nation IPO

Here are some things that you need to keep in mind before investing in the Barbeque Nation IPO:

  1. The company has booked losses for the last three financial years.
  2. Barbeque Nation operates in a highly competitive industry
  3. The pandemic has significantly impacted the industry

FAQs

Q1. What is the Barbeque Nation Hospitality Limited IPO?

The Barbeque Nation Hospitality Limited IPO is a Main Board IPO for the issue of equity shares having a face value of Rs.5 totaling up to Rs.452.87 crores. The registrar for the IPO is Link Intime India Private Limited and the shares are proposed to be listed on the BSE and NSE.

Q2. What are the open and close dates of the Barbeque Nation Hospitality Limited IPO?

The Barbeque Nation Hospitality Limited IPO opens on March 24, 2021, and closes on March 26, 2021.

Q3. What are the lot size and minimum order quantity of the Barbeque Nation Hospitality Limited IPO?

The lot size of the Barbeque Nation IPO is 30 shares. Also, the minimum order quantity is 30 shares.

Q4. What are the allotment and listing dates of the Barbeque Nation Hospitality Limited IPO?

According to the DRHP, the basis of allotment will be finalized by April 01, 2021. Further, investors can expect to receive the credits in their demat accounts by April 06, 2021.

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