Burger King India IPO Will Hit The Primary Market On December 02. Should You Subscribe?

It says that “Things never grow in isolation”. The rise of a sector in equity markets also brings sunshine in the associated sectors too. As quick as the OTT (Over the Top) media platforms are gearing up in the Indian media sector and spending budget of Indian families is rising on weekend parties, the restaurant chains are gaining the limelight. After the success stories of Jubilant Foodworks and Westlife Development in the Indian secondary market, Burger King is set to open on December 02 with fresh issue and Offer for Sale. 

The issue size of Rs. 450 crores and 6 crore equity shares by QSR Asia is a mix of offer for sale and fresh issue. According to Draft Red Herring Prospectus, the issue comprises of Rs. 450 crores to be raised from issuance of fresh equity which will be utilized for funding new stores of Burger King in order to increase their reach and augmenting general corporate purposes.

Burger King India IPO Details:

  • Issuer Company: Burger King India.
  • Industry: Restaurant chain
  • IPO Size: 810 cr.
  • Price Band: 59-60
  • Issue Open Date: 02 Dec, 20
  • Issue Close Date: 04 Dec, 20
  • Listing Date: 14 Dec, 20
  • Minimum Lot Size: 250 shares
  • Employee Discount: NA
  • Face Value: 10 Rs. Per share
  • Retail Allocation: 10%
  • Listing Exchange: NSE, BSE

About the Company

Founded in 1954, Burger King is the 2nd largest hamburger chain in the world. The company claims to attend 11 million customers everyday around the world. The commitment of the company to provide fresh, high quality, affordable and best tasting food has made the brand successful for more than 50 years. On the domestic front, Burger King India has 261 restaurants in 57 cities across the country, in places such as Delhi-NCR, Mumbai, Pune, Chennai, Hyderabad, Bengaluru, Chandigarh, Ludhiana, Amritsar and Kochi. As per Master Franchise and Development Agreement, Burger King India is required to open atleast 700 outlets till December 31, 2026, which has been extended by one year recent due to ongoing pandemic.

Must Read: Why FMCG stocks are considered as defensives in equity markets?

Industry Growth Drivers

The organized Indian food service market has gained traction in last decade as a shift in traditional pattern of Indian families from eating at home to dining out has gained their sales, which has assured a constant growth of the Indian food market. The characteristics of the industry such as accounting transparency, continuous updating in their product offerings, less outlets penetration and organized operations with quality control will keep the ongoing momentum intact. Moreover, the Indian families are getting more health conscious and organized food chain is an optimal fit for their dining.

Financials

On the financial front, the company had reported 38.2 crores net loss for the year ending 2019. The company do not claims the tag of debt-free as a whooping amount of Rs. 483.6 crores in the form of non-current liability is occupied in balance sheet. The company has not paid any dividend in last three years. The issue price is 5.9-6 times of Face value while Price-Earnings multiple is negative. The company is raising funds for the purpose of expansion and shorter cash conversion cycle will keep restricting their working capital requirements. In the listed space, the company will face tough competition from Jubilant Foodworks and Westlife Development while in the unlisted space; the company has various other competitors such as Haldiram, Taco Bell, Pizza Hut, Subway, Kfc’s and Bikanervala.

Also Read: Opportunity is standing at the doorstep of real estate sector! Grab it.

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