Vidli Restaurants IPO – Should you invest?

Vidli Restaurant IPO ReviewVidli Restaurants IPO – Should you invest?

Mumbai based, Vidli Restaurant IPO would open for subscription on 3rd February, 2016. Vidli Restaurant Ltd runs a chain of restaurants across India. It revenues grown by 5.3 times in 1 year. It generates thin margins of 2.7%. Its issue price is offered at P/E Ratio of 2.3 times compared to its peers of 69+. What are the positive factors of the Vidli Restaurant IPO? What are its hidden factors in Vidli Restaurant IPO?

About Vidli Restaurant Limited

The company  runs  a  chain  of  restaurants  serving  hygienic  standardized  food items  in  a  quick  serve format at various outlets on national highways, state highways and cities. Currently, as on December 30,  2015,  Company  has  39  restaurants  in  western  &  central  India  having  presences  on  major highways.  The company  believes  in  providing  quality  food  in  hygienic  surroundings  at  convenient locations  for  serving  its customers  better.  Hygiene,  quality  and  customer  satisfaction  are  core concepts  exercised  by  its team  at  all  outlets  which  distinguishes  from  local  restaurants. 

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Issue details of Vidli Restaurant IPO

  • IPO opens: 3-Feb-2016
  • IPO closes: 5-Feb-2016
  • Face Value: Rs 10 per share
  • Issue price: Rs 10 per share
  • Issue size: Rs 131 Lakhs
  • Lead Managers: Panthomat Capital Advisors Pvt Ltd
  • Listing: BSE SME
  • Download Vidli Restaurant IPO Prospectus from SEBI Website at this link

Purpose of the IPO

1. Finance establishment of new food joints;

2. General Corporate Purpose;

3. Issue Expenses

Company Financials (reinstated)

  • Company generated revenue of Rs 48.2 Lakhs for the year ended Mar-14 and Rs 259.07 Lakhs for the year ended Mar-15.  
  • Company posted a profit of Rs 4.42 Lakhs for the year ended Mar-14 and profit of Rs 6.89 Lakhs for the year ended Mar-2015.
  • Its restated EPS for FY 2015 is Rs 4.2 and last 3 years average EPS of Rs 16.76.

Vidli Restaurant IPO - Financials

Reasons to invest Vidli Restaurant IPO

  • Revenue has increased by 5 times in just 1 year (FY2015 Vs FY2014)

Reasons not to invest in a Vidli Restaurant IPO

  • It generated thin margins of 2.7% in FY2015.
  • Certain  of  its Directors, Promoters  and  Group  Companies are  currently  involved  in  legal  proceedings  pending  at  different  levels  of  adjudication  before  various  courts  and  tribunals.  A classification  of  legal  proceedings  and  the  monetary  amount  involved  in  the  cases  currently outstanding is mentioned in brief below.
  • Company success  depends  significantly  on  the  value,  perception  and  marketing  of  brands  namely “VITHAL KAMATS” and “KAMATS”.
  • Group   company   Kamat   Hotels   (India)   Limited   was   referred   to   Corporate Debt Restructuring  cell  during  Fiscal  2013.  Post  failure  of  CDR, Kamat  Hotels  (India)  Limited received  recall  notices  and  subsequently  many  lenders  have  assigned  the  loans  in  favour  of asset reconstruction companies
  • They have a very limited operating history, which may make it difficult for investors to evaluate its historical performance or future prospects.
  • They generate  a major portion  of  its revenue  from  operations  from  franchisees  outlets.  Their discontinuation could have an adverse impact on its revenue and results of operations.
  • Some of its Group companies have incurred losses during the last three fiscal years.
  • SME IPO’s are trading in low quantity. One may have liquidity issues.
  • Other risk factors (Internal and external) can be viewed in prospectus Page no. 16 onwards.

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Recommendation / Investment strategy

  • On the issue price of Rs 10 and based on FY2015 EPS of Rs 4.2, its P/E Ratio works out to be 2.38. Similarly, based on last 3 years EPS of Rs 16.76, P/E Ratio works out to be 0.8. Means company is asking the issue price of Rs 10 in the P/E ratio of 0.8 to 2.38. Its peers like Jubilant Foods P/E ratio is 79.4 (Highest) and Speciality Restaurants is 69.1 (Lowest). Hence the issue price of Rs 10 is reasonably priced.
  • Vidli Restaurant Limited revenues have grown aggressively in 1 year. However, it generates thin margins of 2.7%. It generated higher margins for the 6 months ended Sep-15, however, we need to see such higher margins consistently. Its share price is reasonably priced. High risk investors can invest in this IPO.

Disclaimer: I do not have an interest in investing in this IPO. The idea of giving positive and negative factors to investors in this article is to create awareness and education about this IPO. One should NOT constitute this as investment advice to buy or not to buy. Please consult your investment advisor before you invest in such high risk investment options.

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Vidli Restaurants IPO – Should you invest

Suresh KP


  1. VIDLI RESTAURANT is running chains of restaurants serving hygienic standardize Veg food items mainly south indian food under brands "Vithal Kamat" and' Kamats'.

    This is 3rd year of operations and listed on BSE sme platform in Feb 2016.

    Presently they have 72 active franchisees and the run rate for franchisee addition is increasing at faster pace.

    Has hired Mr Lowell Farkas as consultant who headed PANERA fast food  chain in USA .

    All the systems and centralized supply chain are in place now.

    Opened outlets in Gurgaon, manali, Shimla , Gujrat and opening one at Delhi Airport soon.

    Recently opened outlet outside Meera road station and planning to open more outlets on Mumbai local train stations .

    All franchisees are registering healthy year on year same store growth in sales.

    The half yearly results on 8th Nov 2016 are expected to be above market expectations which will bring the P.E ratio at reasonable levels.

     Company plans on track to add 400 franchisees till the end of fy 18, in that case they will get a PAT of 6-7 crores. Market gives a PE of 55-60 for QSR high growth consumption sector story.

    So the market cap can reach a level of 400 crore plus levels.

    Presently it have a market cap of 49 crores so its a sure shot 10 bagger from here.

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