Barbeque Nation Listing: Second Covid Wave Raises Risk

Brokerage firm Motilal Oswal has said that the valuations for Barbeque Nation, which got listed on Wednesday are cheap, but, second wave of covid-19 infections raise a concern.

Barbeque Nation, one of India's leading casual dining restaurant chains, made a decent debut on Wednesday after an initial hiccup. The stock surged 20% to Rs 590.40 (BSE) after listing at a marginal discount of 2% at Rs 492. The IPO issue price was at Rs 500 per share.

The company had raised Rs 452 crore through the IPO last month which had seen subdued demand and was subscribed just 6 times. The company owns and operates Barbeque Nation Restaurants, Toscano Restaurants and You and Barbeque ("UBQ") by Barbeque Nation. As of December 31, 2020, the company had 164 restaurants owned and operated by them. The company's operations were impacted last year due to pandemic led lockdowns. The company has took various initiatives to overcome the challenges including cost optimisation, focus on delivery business, as well as updated their BBQ App.

"At current price the stock trades at 3.4x EV/Sales which is at a discount to other peers like Jubilant Foodworks (Domino's) and Westlife Development (McDonalds). However the company has reported net loss in three out of the four previous fiscals. That apart the second wave of pandemic has raised the risk of further slower growth in the near term. While valuations appear cheap, investors only with a long term horizon may look at the stock," Motilal Oswal said in a brief note post the listing of Barbeque Nation shares.