Burger king India raises close to $50 million from its Day 1 of IPO, issue fully subscribed with retail portion booked 9.4 times; receives thumbs- up from Investors

Burger King India limited, in its first initial public offering (IPO), has subscribed 1.8 times so far in its 1 st day of the bidding.

Burger King India Limited has raised Rs 364.5 crore from anchor investors on December 1, 2020, ahead of its public issue opening. 

As per the stock exchange filing, Burger King India allotted 60.75 million shares to about two dozen anchor investors at Rs 60, respectively. 

The BSE (Bombay Stock Exchange) circular, which reports this, also has the Burger King stock-exchange filing attached.

Few of the investors that partook in the anchor book include – Sundaram MF, Steinberg India Emerging Opportunities Fund, ICICI Prudential, Samsung India Securities, Nippon Life, Fidelity Funds, Government of Singapore, Eastspring Investments India, Aditya Birla Sun Life Trustee, Elara India Opportunities Fund, IDFC MF, SBI MF, Monetary Authority of Singapore, HDFC MF and Amansa Holdings.

Burger King opened its IPO today, December 2, and is open for a duration of three days until December 4; the price band for the issue is fixed at 

Rs 59 -60 per share.

On day 1 – the Rs 810 crore public issue has received bids for 13.24 crore equity shares against an IPO size of 7.45 crore equity shares, as per the data available on stock exchanges.

Burger King (BK) is an American multinational chain of hamburger fast food restaurants and was started in Maimi – Dade County, in Florida in 1953.

Burger King started its operations in India in November 2014. Since then, it has enjoyed immense popularity and is patronized by many across the country.

Through the first five years of its operation in India, it was the fastest-growing international QSR chain in India.

The Burger King brand is the second-largest fast-food burger brand globally as measured by the total number of restaurants, with a worldwide network of over 18,000 restaurants in more than 100 countries and US territories.

Burger King India in rapid expansion mode

It has a target of opening 700 restaurants by the year 2026; even though the company has reported losses, its revenue is growing at a rate of 50 percent, CAGR; the company is in a growth phase and is swiftly expanding.

Burger King India is all set to take advantage of the rapid growth potential in the QSR industry as well as India’s growing trend towards a more organized sector.

While the Covid -19 pandemic has hit the company hard with most of its outlets non – operational, as is the case with most restaurants, the company still has a comfortable debt to equity ratio.

As part of the company strategy, it plans to use a portion of the IPO proceeds to repay its debt and towards its expansion process. 

In the last six years of its operations in India, the company has opened 268 stores across India, including eight sub – franchised Burger King with

restaurants spanning across 17 states and 57 cities across India.

However, the stock analysts suggest for investors to subscribe for listing gains only for the short-term as the Covid – 19 situation is still prevalent and might disrupt the plans of the company to expand, and could be risky since it is a relatively a new player in the market and faces tough competition from other food brands in India.

However, at 2.7x P/Sales, Burger King is comparatively cheap compared to 10.4x P/Sales and 6.32x for Jubilant Foodworks and Westlife Development, respectively.

For investors to take a long-term call, further improvement in the bottom line, reduction of debt, and store sales growth need to be analyzed in the coming quarters.

Going by way of its expansion plan, experts believe that the company will set out to achieve the target of 700 stores in India by December 26.

Burger King has received a thumbs up from market watchers since – as it increases the number of its stores across the country, the operating leverage will plugin, and hence the company will be able to register profit. 

They also are of the belief that the company enjoys sufficient scope of its expansion plans and business in India.

Hence it is said to have a reasonable possibility of listing gains as compared to the other listed peers, also given its lower valuations.

They have further given it a positive due to the growth potential for both the company and the industry. 

Hence, investors are recommended to subscribe to the issue for the long term and for listing gains.