Investing in Flavor: Upcoming IPOs to Watch in India's F&B Industry

When a brand decides to embark on an Initial Public Offering (IPO), it's stepping into a transformative phase that promises not just financial upliftment but also a broader impact on its market presence and operational dynamics. An IPO is essentially a financial strategy that allows companies to raise significant capital by offering shares to the public for the first time. This move is not just about enhancing liquidity and capital reserves; it's a powerful signal to the market, enhancing the brand's visibility, credibility, and valuation. Moreover, going public opens up new avenues for growth through acquisitions, provides a platform for rewarding employees and early investors, and garners invaluable market feedback. The decision to go public, therefore, is a pivotal moment for brands, signifying a leap into a future where they are scrutinized by a wider audience but also endowed with the resources and esteem to scale new heights.

In India, a burgeoning middle class with increasing disposable income and a keen interest in dining experiences has propelled many restaurant chains toward Initial Public Offerings (IPOs). Over the last few decades, numerous restaurant chains have ventured into the stock market through initial public offerings, with varying degrees of success. As March draws to a close and we step into a new financial year, it's an opportune time to keep an eye on the food and beverage (F&B) brands preparing to launch their IPOs.

Upcoming IPOs: F&B Chains Going Public This Year

Among them, Bikanervala, known Indian brand specializing in sweets, snacks, and restaurants, with revenues surpassing INR 3,000 crore, is charting a course towards an IPO for its food segment within the next three years. In the interim, the company, owned by the discreet Aggarwal family and also known for its Bikano brand, is considering partnerships with private equity investors. With ambitions to cross revenues of Rs 10,000 crore by 2030, Bikanervala Foods is investing heavily in new manufacturing facilities dedicated to Indian snacks, signaling its commitment to growth and expansion in the sector.

Swiggy, a leading competitor of Zomato, is gearing up for a monumental IPO, anticipated to be one of the most significant public offerings by an internet company in the coming year. Slated for a mid-2024 debut on the stock exchanges, Swiggy is eyeing an IPO size of $1 billion (approximately INR 8,300 Cr). Industry insiders suggest that this move could see SoftBank, the world’s largest tech investor, significantly scale down its 9 percent stake, valued at over $800 million. This strategic decision might also pave the way for SoftBank and other investors to divest their holdings in Swiggy, as the food delivery titan progresses towards profitability. This is in stark contrast to Zomato, whose share value has diminished by over 20 percent since its IPO launch in July 2021.

In another development, Rebel Foods, the umbrella company for brands like Faasos, Behrouz Biryani, Oven Story Pizza, and Mandarin Oak, is preparing for its own IPO. Expected to submit its draft red herring prospectus in the latter half of this year, Rebel Foods aims for a 2025 listing on Indian stock markets. This endeavor will mark a significant milestone, positioning it as the first cloud kitchen business in the country to go public. Established in 2011 and based in Mumbai, Rebel Foods leverages both its proprietary platforms and partnerships with Zomato and Swiggy for delivering food, underlining the dynamic expansion of India’s F&B delivery sector.

Impresario Handmade Restaurants, with a network spanning over 60 outlets across more than 20 cities, is focusing on expanding its ‘SOCIAL’ brand, as disclosed by its Founder and Managing Director Riyaaz Amlani. The chain, which also manages other popular brands like antiSOCIAL and Smoke House Deli, anticipates ending FY24 with revenues nearing INR 700 crore. Following this, it aims to achieve a growth rate of 20–25 percent annually. Although currently well-equipped financially to fuel its expansion ambitions, Impresario is considering an IPO in the future, depending on market conditions, and is open to exploring various financing avenues, Amlani noted in a recent interview.

How IPOs Serve Up Success for India's Restaurant Industry

In India, restaurants and food service chains opt for Initial Public Offerings (IPOs) to harness a myriad of benefits, including substantial capital infusion for expansion, operational upgrades, and debt reduction. This strategic move not only enhances their visibility and brand credibility among consumers but also offers a platform for liquidity and potential exit opportunities for existing investors. 

Typically, these entities choose to go public after achieving a stable growth trajectory, a robust business model, and a clear path to profitability, which can vary widely in timing depending on the company's scale, market conditions, and strategic goals. “The decision to launch an IPO is often aligned with favorable market conditions and a strong appetite among investors for new listings, which can provide the necessary momentum for a successful public debut. By leveraging public markets, restaurants in India can accelerate their growth, diversify their offerings, and strengthen their competitive position in a rapidly evolving food and beverage sector,” Investment banker, Miheer Mehta who runs his own investment advisory firm stated.

Investor Opportunities in India’s F&B IPO Landscape

Investing in the IPOs of restaurant and F&B chains in India offers several enticing benefits for investors and the general public. This sector benefits directly from the country's economic growth, with an expanding middle class, increased urbanization, and a shift in consumer behavior towards organized dining and convenience food, making it a fertile ground for investors. The inclusion of such stocks in an investment portfolio not only offers diversification away from traditional sectors but also aligns with a long-term growth trajectory powered by demographic and socioeconomic trends. 

Early participation in these IPOs can provide investors with a front-row seat to capitalize on the sector's expansion and the potential for significant returns as these companies scale operations, improve margins, and explore new markets. “For investors seeking not just financial returns but also alignment with consumer trends and preferences, investing in F&B IPOs allows for a stake in brands with which they have a personal connection or admiration, adding a layer of personal satisfaction to the investment decision,”  Sujeet Mehta, co-founder of Restaurant Consultancy Firm, We Serve commented. This investment avenue thus offers a unique blend of financial opportunity and personal involvement, set against the backdrop of India's dynamic economic landscape.

Restaurants IPOs that are Performing Well in India

Sapphire Foods, a leading restaurant operator across the Indian subcontinent and known for its stewardship of KFC & Pizza Hut outlets, marked its entry into the public market in November 2021. Demonstrating a robust performance, Sapphire Foods has seen a one-year return of 16 percent, with its issue price at INR 1180 and the current share price appreciating to INR 1392.

Devyani International Limited (DIL), with a notable presence in the fast-food sector, launched its IPO at a share price of INR 90, which has since ascended to INR 147. Similarly, Burger King India Limited began its public journey with shares priced at INR 60 during its IPO, now trading at an impressive INR 101, showcasing the vibrant potential and investor confidence in India's restaurant and F&B sector.

As more restaurant and F&B companies in India decide to go public, there's a lot of excitement and opportunity for investors. These IPOs (when companies sell their shares to the public for the first time) are a big deal because they show that the food industry in India is growing fast. This growth is good news for people looking to invest because it means there's a chance to make money by investing in companies that are doing well. With big names like Bikanervala, Swiggy, and Rebel Foods planning to launch their IPOs, investors have a great chance to get involved in a booming sector. This move is not just good for the companies that get a boost of money and attention but also for investors who get to be part of a success story in India's vibrant food scene.