Devyani International IPO allotment status and capital gain tax on selling shares in IPO allotment | Capital gain on IPO

Incorporated in 1991, Devyani International Ltd is the largest franchisee of Yum Brands and among the largest quick-service restaurants (QSR) chain operators in India with 655 stores across 155 cities all over the country as of Mar 31, 2021. Yum Brands Inc operates many fast food brands i.e. Pizza Hut, KFC, and Taco Bell brands.

It operates 3 business verticals; 1. Core Brands (KFC, Pizza Hut, and Costa Coffee stores in India), 2. International Business (stores in foreign countries i.e. Nepal and Nigeria), and 3. Other Businesses (own branded stores i.e. Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar).Initially, the business started with a Pizza Hut store in Jaipur but subsequently expanded operations in both KFC and Pizza hut, as of March 31, 2021, it operates 264 KFC stores, 297 Pizza Hut stores, and 44 Costa Coffee stores in India.

 

Company Financials:

Summary of financial Information (Restated Consolidated)

Particulars	For the year/period ended (₹ in million)
	31-Mar-21	31-Mar-20	31-Mar-19
Total Assets	16,684.07	18,835.76	18,074.90
Total Revenue	11,988.95	15,350.41	13,236.83
Profit After Tax	(629.87)	(1,214.18)	(941.44)

Objects of the Issue:

• Repayment and/or prepayment of company’s borrowings fully or partially.
• General corporate purposes.

 

Devyani International IPO Subscription Status (Bidding Detail)

The Devyani International IPO is subscribed 116.70x times on Aug 6, 2021. The public issue subscribed 39.48x in the retail category, 95.27x in the QIB category, and 213.06x in the NII category.

Category	IPO Subscription
QIB	95.27x
NII	213.06x
RII	39.48x
Employee	4.70x
Total	116.70x

The proposed listing date for IPO is 16.08.2021.

 

Check Allotment Status on Registrar’s Website

The registrar for this IPO is Link Intime India Private Limited.

• The registrar for the IPO is Link Intime India Private Limited and the shares are proposed to be listed on the BSE and NSE.
• After you land on the website’s homepage, click on public issues. You will see a drop-down that says ‘Select Company’.
• From the drop-down menu, select ‘Devyani International Limited’.
• For identification, you can give your PAN number, application number, DP/client ID, account number/IFSC code.

Check Allotment Status on BSE

Step 1: Investors are required to follow this link to check their IPO allotment status on BSE: https://www.bseindia.com/investors/appli_check.aspx.

Step 2: You will then have to select the ‘Equity’ option and then from the dropdown, select issue name – ‘Devyani International Limited’

Step 3: You will have to enter your application number and PAN card number next.

Step 4: After completing all the above-mentioned steps click on the “Search” button.

 

Capital gain tax on sale of shares received in IPO allotment:

Now, let’s talk about the taxability of gain earned if the shares are sold on the listing date itself to get listing gain by way of premium on listing and if the same is sold after some time.

 

There can be two types of gain’s: (i) long term or (ii) short term.

 

Since the shares are going to be listed on stock exchange hence, if the shareholder sell such shares on the recognised stock exchange, such shares will be considered as long term asset if they are held for more than one year and will be considered as short term if they are held for a period less than 1 year.

 

The taxability of such shares will be calculated based on section “111A for short term gain” and “112A for long term gain” wherein tax rate of short term gain is 15% of the gain and for long term gain the tax rate is 10% of the gain amount.

 

Looking at the current scenario we know that many people sell their shares on the listing day itself to earn the listing premium and hence the gain earned by such transaction will be considered as short term capital gain as the assessee held shares for less than one year period and hence he/ she shall be liable to pay tax at the rate of 15% on such gain under section 111A of the Income tax Act.

 

However if the shareholder holds the share for more than one year from the date of listing as the specialty chemical sector is likely to see boom in next year then he or she shall be liable to pay tax at the rate of 10% on the gain amount under section 112A of the Income tax Act.

 

Further, for long term capital gain no tax needs to be paid on the initial Rs. 1 lakh gain u/s 112A of the Income tax Act and no benefit of indexation will be available in case of long term gain since the shares are listed and sold on recognized stock exchange.

 

In case of long term capital gain one can claim exemption u/s 54F by investing the entire sale consideration in a new residential house and if the conditions mentioned under section 54F are fulfilled, other than section 54F there are no other way to save capital gain tax.

 

Also, the tax rates mentioned above are just base rates and surcharge and cess will also be added accordingly on such tax rates.

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