At a time when loss-making companies such as Paytm, Zomato, and Delhivery are gearing up for an initial public offering, here’s a list of some companies who went public in the last two to three years with their balance sheets in red and how they are performing now.
One97 Communications which owns and operates Paytm reported a loss of over Rs 1,700 for the financial year ending March. On June 7, it sent an offer for sale to its investors and employees asking them to dilute their stakes.
Online food delivery startup Zomato’s loss widened to Rs 2,451 crore during the financial year ending March 31, 2020, as compared to Rs 940 crore during the previous financial year. It filed its Draft Red Herring Prospectus (DRHP) with the market regulator in April.
Logistics firm Delhivery, which reported a loss of Rs 284.13 crore during the financial year ending March 2020 plans to go public after six months.
Of late, the Indian regulation has started allowing loss-making companies to list on the bourses, however, it is still not as popular as the Silicon Valley where most of the technology companies such as Uber, AirBnB, and Amazon, among others go public with their balance sheet in red.
To ensure safe market trading the regulator mandates that whenever a loss-making company lists, 75% of their net public offer remains reserved for Qualified Institutional Buyers while the rest 25% is open for retail investors.
According to Prime Database, India saw 48 companies going public since 2019 out of which at least six were making losses as per their offer of sale document.
Moneycontrol has compiled details of how some of the firms performed on the bourses and what they are doing now.
3 out of 5 IPOs mentioned below listed with a premium. However this calendar year, Barbeque Nation Hospitality and Macrotech Developers opened with a discount to their issue price.
Check it out:
1. Macrotech Developers Ltd: Incorporated in 1995, the real estate firm went public in April. The company which was earlier known as Lodha Developers had reported a loss of Rs 264.3 crore for the nine months period ending December 2020, against a profit of Rs 503 crore in the corresponding period. Revenue had also fallen drastically to Rs 2,915 crore, from Rs 9,272.9 crore in the same period impacted by the COVID-19 crisis.
The public issue somehow managed to sail through with the help of qualified institutional buyers (QIB) on the last day of bidding, subscribing 1.36 times during April 7-9 period. The company ended up raising Rs 2,500 crore from investors.
This was its third attempt to go public after it failed twice before due to unfavorable market conditions.
2. Burger King India Ltd: The quick-service restaurant chain launched its maiden public offer in December. In the financial year ended March 2020, Burger King had reported a loss of Rs 76.6 crore on revenue of Rs 841.2 crore.
It had a strong opening premium of 92.25 percent on the first day of trade on December 14. The listing premium was better than expected given the stellar subscription and consistent strong revenue growth as well as store additions over the past more than five years of operations.
In a bumper listing, it ended up raising Rs 810 crore through a public issue which was subscribed 156.65 times during the December 2-4 period. The company is going to utilise issue proceeds for debt repayment and expansion.
The company which currently operated 270 restaurants including sub-franchisees till December 2020 plans to open about 50 restaurants in the financial year 2022 followed by 70 and 80 restaurants in consecutive years.
3. Barbeque Nation: The Rs 453 crore initial public offering of the casual dining chain opened for subscription on March 24 and closed on March 26 with a subscription of almost six times. The offer comprised a fresh issue of Rs 180 crore and an offer for the sale of Rs 273 crore equity shares by existing selling shareholders.
The timing of the IPO worked in their favour since Covid19 had just entered the country and there was no immediate vision on the impact it had on food and beverages and hospitality firms.
Shares of the company keep surging and hitting the upper circuit from time to time. The reason behind this euphoria is its decision to add delivery to its otherwise dine-in business in a market that is impacted by the pandemic.
The company had reported a loss of Rs 33 crore in the financial year 2020 for a revenue of Rs 851 crore.
4. Vishwaraj Sugar Industries: Sugar and allied products manufacturing company made a debut in the primary market in September 2019.
On a consolidated basis, the company had reported a net loss of Rs 17.62 crore on net sales of Rs 286.21 crore during the financial year ending 31 March 2019.
The IPO opened on September 30 and closed on October 4 being subscribed 1.12 times.
The company is now making profits with Rs 8.29 crore of profit reported during the financial year ending March 2021. This is against a net loss of Rs 7.88 crore during the previous year. The sales have also risen 15.15% to Rs 426.46 crore.
5. CSB Bank: The private sector lender made a strong debut on markets on December 4, 2019, with the share price rallying 57.4 percent over the issue price of Rs 195 on a listing day. The bumper listing was along the expected lines despite the company reporting a loss of 65.69 crore for the financial year ending March 2019. It had brought down the loss from Rs 127.09 crore reported a year ago.
Earlier this year, the company posted an all-time high net profit of Rs 218.40 crore for the fiscal ending March 2021 as against Rs 12.72 crore in FY20.