UPDATED: April 6, 2021 15:28 IST
The investors who have subscribed to Barbeque Nation Hospitality’s initial public offering (IPO) may be left disappointed when it lists on the stock market on Wednesday.
The grey market premium on unlisted shares of the casual dining restaurant chain has plunged sharply due to ongoing uncertainties and increased market volatility.
Dealers on the grey market or the unofficial market for unlisted shares have told The Economic Times that the premium on the stock fell to Rs 10-12 from Rs 40 a week ago. Going by its price band of Rs 498-500, the company’s stocks on the grey market are now trading at Rs 510-512.
Most analysts have also confirmed that they are expecting a weak listing for Barbeque Nation Hospitality tomorrow, citing a rapid spike in Covid-19 cases and the fears of stricter curbs.
The Barbeque Nation Hospitality IPO opened for subscription on March 24 and closed on March 26. The price band for the IPO was fixed at Rs 498-500 per share.
ABOUT THE IPO
The Barbeque Nation Hospitality public issue comprised a fresh issuance of Rs 180 crore and an offer-for-sale (OFS) of Rs 272.87 crore.
The dining chain plans to use the proceeds from the IPO towards ongoing restaurant expansion and for repaying existing debts.
The IPO had received a weak response due to the crisis faced by the restaurant sector during the peak of the Covid-19 pandemic. The situation is likely to get worse as India is already the second wave of Covid-19.
What experts said about BBQ IPO
A number of brokerages had advised against subscribing to the issue or maintained a neutral stance. While Barbeque Nation is one of India’s fastest-growing restaurant brands, there are some concerns that brokerages listed.
One of the biggest concerns cited by brokerages was the impact of the pandemic. Some brokerages also indicated that there has been a deterioration in the performance of the company.
Analysts also said that if the company fails to implement a growth strategy, it could impact the business going forward.
Most brokerages had either given a neutral rating to the IPO, while others had asked investors to skip it.