The initial public offering of Burger King, one of India’s fastest growing fast service restaurant chains with 268 outlets, turned out to be the third company to cross the subscription mark 150 times in the calendar year 2020.
With a subscription of 156.6 times, after Mazagon Dock Shipbuilders, it has obtained the second highest subscription in the current year.
By December 2026, Burger King India plans to open 700 restaurants.
During December 2-4, the Rs 810-crore IPO was approved 156.6 times overall as it received tenders for 1,166 crore equity shares against the offer size of 7.44 crore equity shares (excluding anchor book portion).
The strong interest in the issue was attributed to attractive valuations, strong brand positioning, healthy financial prospects, India’s rapid service restaurant industry’s anticipated robust store expansion plans.
Mazagon Dock Shipbuilders’ Rs 443-crore IPO, the state-owned defence firm, had the highest subscription in 2020 at 157.4 times. The issue opened during the time between September 29 and October 1.
The price range for the offer was set at approximately 59-60 per share.
Burger King’s BSE and NSE shares are proposed to be listed. The share allotment is scheduled to be finalized on 9 December and, according to brokerages, the listing will take place on 14 December 2020.
QSR Asia Pte Ltd, the promoter company, will sell up to 6 crore shares through the IPO. The selling will fetch around 360 crore at the upper end of the price band.
The managers involved in the bid are Kotak Mahindra Capital Firm, CLSA India, Edelweiss Financial Services and JM Financial.
Burger King India received ~364.5 crore from anchor investors on Tuesday.
At present, the fast service restaurant (QSR) chain operates 268 stores in India and eight of them are franchises, primarily located at airports, while the remainder are owned by the company.
In contrast to 10.4 times price-to-sales ratio and 6.32 times for Jubilant Foodworks and Westlife Growth respectively, analysts termed Burger King’s valuation of 2.7x as comparatively inexpensive. The McDonald’s chain of fast food restaurants in West and South India is owned by Westlife.
We advise investors to subscribe to listing gains only for now, keeping the risks in mind. In the following years, more progress in bottom-line, debt reduction and same store revenue growth should be evaluated.
