It’s raining initial public offers (IPOs) on Dalal Street. The IPO pipeline for August 2021 looks strong, with four public issues hitting the market this week. Devyani International, Windlas Biotech, Krsnaa Diagnostics and Exxaro Tiles will open for subscription on August 4 and close on August 6. Here are all the key details you wanted.
1. Devyani International IPO
Devyani International is a Quick Service Restaurant (QSR) company. It is the largest franchisee of Yum Brands, operating core brands such as Pizza Hut, KFC, Costa Coffee besides its own brands such as Vaango, Food Street, Masala Twist, Ile Bar, Amreli and Ckrussh Juice Bar having 692 stores in 26 states across 155 cities in India.
The company is expected to raise Rs 1,838 crore comprising a fresh issue and offer for sale. The IPO price band is Rs 86 to Rs 90 per share. The minimum lot size is 165 shares or a minimum investment of Rs 14,850. The IPO listing will happen on August 16.
Devyani International Ltd (DIL) IPO follows a few notable ones in the food space like Zomato, Burger King and Barbeque Nation. As per offer document, DIL has shown Jubilant Foodworks, Westlife Development and Burger King as its listed peers. The company has a positive cash flow but with negative working capital. The IPO proceeds are expected to Devyani International debt-free.
2. Windlas Biotech IPO
Windlas Biotech (Windlas), the fifth largest domestic CDMO (Contract development and manufacturing organization) in India aims to raise around Rs 400 crore. Out of this Rs 237 crore is an offer for sale from existing shareholders. PE investor Tano India is putting their entire 22 per cent stake on the block with this IPO. Windlas provides development and manufacturing services to Indian generic formulation manufacturers, serving 7 of the top 10 in India including MNCs.
Windlas Biotech IPO price band is Rs 448 to Rs 460 per share. The minimum lot size is 30 shares and so the minimum investment amount required to apply is Rs 13,800. Do note the company’s shares are expected to get listed on August 17. Post the IPO, promoter holding will fall to 65.16 per cent.
Based on reported EPS of FY21, the valuation is at 54 times earnings, at the higher end of IPO price. Adjusted for the impairment charge in FY21 (Rs 27 crore), the PE multiple is around 32 times FY21 earnings compared to other API manufacturers who trade at 24-35 times FY21 earnings. The company has posted a CAGR of around 38 per cent in top-line and 58 per cent in gross margins for the last three fiscals.
3. Krsnaa Diagnostics IPO
Krsnaa Diagnostics is one of the fastest-growing diagnostic chains in India. It has a network of diagnostic centres across India with a key focus on non-metro, and lower tier cities and towns. As of December 31, 2020, it operates 1,801 diagnostic centres that are offering radiology and pathology services across 13 different cities in India. In fiscal 2020, the business has served 5.27 million patients. The company is loss-making.
Krsnaa Diagnostics Ltd (KDL) is planning to raise around Rs 1,200 crore through the IPO, which has an offer for sale component of Rs 813 crore. The IPO price band is Rs 933 to Rs 954 per share. The minimum lot size is 15 shares and so the minimum investment amount required to apply is Rs 14,310. Krsnaa Diagnostics’ shares are expected get listed on August 17. Post the IPO, promoter holding will fall to below 28 per cent.
The company has a strong pan-India presence in high capital incentive imaging and pathology services mainly in Tier II and III government hospitals via PPP tender contracts. In addition to the PPP segment, the company has been growing its collaboration with private healthcare providers to operate diagnostic centres within their facilities. However, generation of free cash flow is likely to remain a challenge as it operates in a high capex low opex segment. KDL has shown Metropolis Healthcare and Dr. Lal Pathlabs as its listed peers who are currently trading at a P/E of 74 and 79 times.
4. Exxaro Tiles IPO
Vitrified tiles maker Exxaro Tiles manufactures Double Charge Vitrified Tiles (double layer pigment) and Glazed Vitrified Tiles made from ceramic materials i.e. clay, quartz, and feldspar. Its product portfolio comprises 1000 plus unique designs of tiles in various sizes. Topaz Series, Galaxy Series, and High Gloss Series are some of the well-established products of the company. It supplies its products to large infrastructure projects i.e. residential, educational, commercial, hotels, hospitals, government, builders or developers, religious institutions, etc. It also exports tiles.
Exxaro Tiles is eyeing an IPO fund-raise of Rs 160 crore with an OFS component of Rs 28 crore. The IPO price band is Rs 118 per share to Rs 120 per share. The IPO minimum lot size is 125 shares, which entail a minimum investment of Rs 15,000. Post the public issue, promoter holding will drop to 42.5 per cent.
For the last three financial years, the company has posted an average EPS of Rs. 3.83. Based on FY21 non-normalised earnings on fully diluted post issue equity, the IPO price values the company at a P/E of 35 times. Based on FY20 earnings, P/E would be close to 48 times.