Barbeque Nation shares soar by 20% shortly after weak IPO listing

Barbeque Nation shares soar by 20% shortly after weak IPO listing

Barbeque Nation shares soar by 20% shortly after weak IPO listing

The shares of Barbeque Nation, one of the leading casual dining restaurant chains in the country, sprung up a surprise and jumped 20 percent, to Rs 590.40, after debuting at a discount of 1.6 percent, on Wednesday 7 April, reported the Business Standard.

The share listed at Rs 492, against the issue price of Rs 500 on the BSE. After initial hesitation, possibly due to the ongoing COVID-19 pandemic and the resultant restrictions, the investors appeared to have shown faith in the long-term prospects of the firm backed by top investor Rakesh Jhunjhunwala.

Barbeque Nation currently owns and operates 138 outlets in India, 5 in the UAE, 1 each in Malaysia and Oman. The main objective of the initial public offering (IPO), in which shares of a company are sold to institutional and retail investors allowing the firm to raise capital, is to use the proceedings to make prepayment or repayment of all or a part of its outstanding borrowings and meet general corporate purposes.

According to a Business Standard report, the company raised Rs 453 crore through its public issue held from 24 March to 26 March. While it has posted a revenue growth of 20 percent CAGR (annual growth of investment) between FY18-FY20, it has been incurring losses at PAT level despite topline growth.

Barbeque Nation also owns Toscano restaurants and UBQ by Barbeque Nation that caters to the delivery segment. The promoters of the company include Sayaji Hotels, Sayaji Housekeeping Services, Kayum Dhanani, Raoof Dhanani and Suchitra Dhanani.

For holding an IPO, the Securities and Exchange Commission (SEC) has laid certain guidelines that a company must meet. Companies hire investment banks to market and set the IPO price and date of listing. When a company goes public, the previously owned private share ownership converts to public ownership.