Varun Beverages launched its initial share sale on Wednesday. The IPO closed on 28 October. Though getting fully subscribed on day 2, the initial public offering of Varun Beverages faced dull demand in the bidding process on Friday.
Data composed from BSE and NSE hinted that the issue received bids for 1,87,63,140 shares by 11.30 am on Friday against the total issue size of 1,76,50,000 shares. Major demand came from qualified institutional buyers, who bade for around 3 times their quota limit. Quota limits for HNIs and retail investors were yet to see full subscription
Many analysts have had a mixed view on the issue. Back-of-envelop calculation implies a PE of 62.5 times and EV/Ebitda of 13.3 times in CY16E for the IPO on a TTM basis. Valuations appear expensive as compared with its global peers, which are trading at 33 times PE and 13.8 times EV/Ebitda.
Snippets of day 2
Varun Beverages Ltd is the world’s second largest PepsiCo Inc. bottler. It saw its initial public offer (IPO) fully subscribed on the second day of the offering as per the data from stock exchanges.
 !
As on Thursday, the total subscription to the IPO stood at 1.02 times. The category for institutional investors was subscribed 2.95 times, or 295 per cent, whereas the section for high net-worth individuals and retail investors were subscribed 0.21 times (or 21per cent) and 0.29 times (or 29 per cent), respectively.
The shares have been priced in Rs440-445 per share. At the upper end of the price band, the company is going to raise a little more than Rs1,100 crore.
Promoters
Promoters namely Ravi Jaipuria and his son, Varun Jaipuria, will sell 5 million shares each in the IPO, whereas the company will sell 15 million new shares to raise primary capital to be invested in the company.
Investors
Investment banks Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd CLSA India Pvt. Ltd and YES Securities (India) Ltd are administering the IPO.
The company is going to utilize the proceeds from the IPO to repay a part of its Rs1,700 crore debt, taken to fuel its expansion in the past few years. Taking a glance at the debt, Rs600 crore is from PepsiCo and interest-free. Nonetheless, the company still pays close to Rs110 crore in interest per annum on the remaining Rs1,100 crore, which is going to reduce by Rs70 crore post the IPO.
Timeline
2013- Between financial year 2013 and June this year, the company invested Rs2,459.14 crore in expansion and modernization of its production capacities and growing the penetration of its chilling equipment namely visi-coolers.
2015- The company extended its operations by attaining new sub-territories in the North which included four production facilities in Uttar Pradesh, Uttarakhand and Haryana.
2016- It acquired two production facilities in Goa and is also in the process of setting up a greenfield facility in Zimbabwe in anticipation of getting franchise rights for the region.
Varun Beverages accounts for 45 per cent of PepsiCo’s volume in India. The company is the only bottler and distributor for the North and East other than Jammu and Kashmir, Odisha, Bihar and Jharkhand states.
Related Articles
No comments:
Post a Comment