Jubilant FoodWorks has opened its initial public offer (IPO). The company runs the renowned fast food chain Domino’s Pizza in the country and has 286 stores in 22 states.
The company proposes to raise up to Rs 328.72 crore by selling 2,26,70,447 shares for subscription and the price band for listing is Rs 135–Rs 145 per share. The offer closes on January 20.
Kotak Mahindra Capital Company is acting as the sole book-running lead manager to the offer.
Experts we spoke to were mixed in their opinion of the IPO. While Investment Advisor SP Tulsian said investors should avoid the issue, Manish Bhatt of Prabhudas Lilladher had the opposite opinion.
Tulsian said 82% of the funds raised would go to shareholders who are selling stake via the IPO while the remaining 18% of the proceeds would be deployed in the company — that too for debt repayment. “It means that for any growth, the company will have to use its internal accruals and not any IPO proceeds,” he said.
The issue, at Rs 135 was steeply priced, he said, based on calculation of number of paid-up equity and market capitalization post IPO. “Based on these prices, it works to around a value of Rs 3 crore per outlet, while it does not even cost Rs 50 lakh for an outlet.”
Bhatt, however, said an investor should subscribe to the issue with a long-term view. "The grey market premium of this IPO is around Rs 25 over its issue price," he said.|||I have already written an article on this:
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