After receiving a positive response to its initial public offering, Burger King India, a subsidiary of the US rapid service restaurant chain Burger King, will make its debut on the bourses on 14 December.
At 60 rs per share, the company fixed the problem price. Its shares in the grey market are sold at a premium of 75%. The premium in the grey market rose by 42 percent in the first week of December before the public issue opened.
In light of stellar subscriptions, lower prices compared to those mentioned above, solid growth in restaurant sales, the analysts expect to see an overall 70%-75% bumper list on December 14, 2014. on the basis of steady acquisitions.
“Burger King IPO received an overwhelming response from investors especially HNIs). The company is also at an emerging stage in India with considerable scope for long-term growth,” AjitMishra, VP of Research at Religare Broking told MoneyControl. “This is the product of cheaper estimates competing with their peer companies like Jubilant Food Works and Westlife Creation (McDonald’s).
Moreover: “Taking cases from the past, we normally think that Burger King will follow suit since the company receiving such an important response from investors.
In the 2-4 December period, the public issue of Rs 810-crore got the second-highest 156.65 subscriptions in 2020.
The listing premium is justified as there is a good possibility of floating into the benefit zone when the normalcy market recovers from COVID’s difficulties and when this occurs the Burgers King’s valuations can go higher and IPO price will grow as a result of the strong subscription demand, you can expect to achieve an increase of 70-75 percent (RS 90 – 100 plus levels) on Rs 60.
He believes that Burger King India offers investors a chance to play in India’s most rapidly expanding quick service (QSR) business. “We assume Burger King is still in the early stage of growth in India and with a strong brand it can make wonders in the next 2 years of investing horizon as future outlook sounds better.”
During the first five years of operation, Burger King India was one of the most rapidly expanding foreign QSR chains in India focused on various restaurants.
From 25 November this year, the company has its own 259 Burger King restaurants and nine Burger King Restaurants. It aims to lift the chain to 700 by the end of December 2026.
Its sales in FY18-FY20 were raised by CAGR by 49% and EBITDA by CAGR by 258% respectively, while the loss at the PAT level remained the same.
Different growth in revenue for FY18 and FY19 was 12.2 and 29.2 percent, with remarkable flat growth in FY20. Burger King India saw COVID-19 effect in the first half of FY21 and thus revenues declined 68 percent YY and losses in EBITDA and PAT were recorded.
The new issue of Rs 450 crore and a 6 crore share bid for sale by promoter QSR Asia became the public issue. In order to open 370 restaurants in CY22, the Company will use approximately Rs 270 crore in the proposal for expanding outlets.
“We like QSR story as a solid Indian discretionary play for the long term and advise investors to add & hold in long term portfolio,” Tapse said.