Burger King India

IPO Size

`810 Cr

Price Band

`59-60 Per Share

Minimum Lot Size

250 Share

Face Value

`10 Per Share

Employee Discount

NA

Retail Allocation

10

Issue Open Date

02 Dec 20

Issue Close Date

04 Dec 20

Listing Date

14 Dec 20

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.

Outstanding Litigation:

S.No. 1 - Company 2 - Directors 3 - Promoters
Entity Name By the Company Against the Company By the Director Against the Director By the Promoter Against the Promoter
Criminal cases - - - - - -
Material civil cases - 6.8 - - - -
Taxation matters - 11.49 - - - -
Regulatory Procedings - 0.55 - - - -
Amt. (In Million Rs.) - 18.84 - - - -

Financial Statements:

Income Statement FY19 FY18 FY17
Gross Operating Income 6441.3 3887.37 2341.33
Cost of Employee & Inventory 3269.43 2142.84 1434.87
Other Expenses 2268.06 1557.12 903.51
EBITDA 903.81 187.41 2.95
Depreciation 822.1 640.36 447.72
Interest  464.5 369.37 273.69
Profit Before Tax -382.79 -822.32 -718.46
 Tax 0 0 0
Profit After Tax -382.79 -822.32 -718.46

Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe for Long Term’. The success stories of Jubilant Foodworks and Westlife Development has put a rosy picture of Burger King. The growth drivers of the foodchain industry due to their organized manner, transparency, health consciousness and regular changes in menu offerings are compelling for investment. However, the financials of the company are not very much lucrative. The company has not posted profits in last three years; therefore no dividend has been distributed. Moreover, the company does not claim 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 only reason which compels for investing on financial upfront is the IPO price demanded by company. The issue price is 5.9-6 times of Face value which is highly cheap in comparison with Jubilant Foodworks and Westlife Development, which is a reason to ‘Subscribe’.

Promoter of the Company

The promoter of the company is QSR Asia Pte. Limited.

Peer Comparison

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. 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.

Objectives of the Issue

Offer for Sale

The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 6 crore Equity Shares held by them. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of 6 crore Equity Shares aggregating up to ₹360.00 Cr (at an upper price band of Rs. 60).

Fresh Issue

The company has planned to raise fresh capital comprising an aggregate of 7.5 crore shares having Face Value ₹10 aggregating up to Rs. 450 Cr at the upper price band of Rs. 60. The net proceeds will be utilized for funding new stores of Burger King in order to increase their reach and augmenting general corporate purposes.