Burger King IPO – Key Updates
Listing Update
Burger King lists at ₹115.35 a premium of 92.25% over the cutoff price of ₹60. The issue received stellar response across all investor categories – QIB, NII and RII. The issue was subscribed 157 times making it the second most subscribed IPO in 2020 so far.
Burger King India Limited raised a total of ₹810 crores from this issue, which consisted of a fresh issue of ₹810 crores and an offer for sale of Rs ₹360 crores by the promoter and selling shareholders
Other Updates
- Amount raised through anchor investors – ₹364.5 Cr via 6,07,50,000 share sal
- Issue oversubscribed – QIB, NII and RII fully subscribed
- BSE/ NSE Listing Date – 14/12/2020
Final Subscription Status
| Investor Category | 4/12/20 -5:00 PM |
|---|---|
| QIB | 86.646x |
| NII | 354.111x |
| RII | 68.144x |
| Total Subscription | 156.650x |
Company Info
Burger King India Limited, founded in 2014, owns the exclusive master franchisee of the famous Quick Service Restaurant(QSR) brand Burger King in India. It is one of the fastest-growing QSR brands in India. As of September 2020, it has 265 stores across India. They plan to have approximately 325 restaurants by December 31, 2020.
Competitive Strengths
- Exclusive national master franchise rights in India
- Strong customer proposition
- Brand positioned for millennials
- Vertically managed and scalable supply chain
- Operational quality, a people-centric operating culture and effective technology systems
- Well defined restaurant roll out and development process
- Experienced, passionate and professional management team
Competitive Strategy
- Maintain the pace of expansion of the restaurant network
- Continue to build on value leadership
- Continue to grow brand awareness and loyalty
- Actively manage unit economics and achieve economies of scale through operational leverage
- Leverage technologies across the business
Growth in Restaurants Since March 31, 2015
| Company | 2015 | 2016 | 2017 | 2018 | 2019 |
|---|---|---|---|---|---|
| Company Owned | 12 | 48 | 85 | 123 | 195 |
| Sub-franchised | 0 | 1 | 3 | 6 | 7 |
| Total | 12 | 49 | 88 | 129 | 202 |
| Net Additions in the Year | 12 | 37 | 39 | 41 | 73 |
As at the date of drafting the Red Herring Prospectus for the Burger King IPO, Burger King India had 216 Company-owned restaurants and 8 Sub-Franchised restaurants. As of September 2020, they have 265 stores across India. They plan to have approximately 325 restaurants by December 31, 2020.
Financials:
| Company | 2017 | 2018 | 2019 (Mar) | 2019 (Jun) |
|---|---|---|---|---|
| Revenue from Ops | 2,299.48 Cr | 3,781.22 Cr | 6,327.35 Cr | 2,122.71 Cr |
| Restated EPS | (4.87) | (3.10) | (1.44) | (0.07) |
| Restated Loss / Profits | (718.46) Cr | (822.32) Cr | (382.79) Cr | (17.66) Cr |
Proceeds from the IPO will be used to:
- Funding rollout of new Burger King Quick Service Restaurants
- General corporate purposes
Burger King IPO Dashboard
Issue Details
| Type | Value |
|---|---|
| Issue Size | ₹810 Cr. (13,50,00,000 shares) |
| Fresh Issue | ₹450 Cr. (7,50,00,000 shares) |
| Offer For sale | ₹360 Cr. (6,00,00,000 shares) |
| Face Value | ₹10/- per Equity Share |
| IPO Price | ₹59 – ₹60 |
| Lot Size | 250 |
| Lots | Min 1 – Max 13 |
Lot Size and Price
| Lots | Shares | Amount |
|---|---|---|
| 1 | 250 | ₹15,000 |
| 13 | 3250 | ₹1,95,000 |
Key Dates
| Date Type | Date |
|---|---|
| Bid Open | 02/12 |
| Bid Close | 04/12 |
| Allotment Finalization | 09/12 |
| Initiation of Refunds | 10/12 |
| Credit of Shares | 11/12 |
| Listing Date | 14/12 |
Promoter Holding
| Holding | Percentage |
|---|---|
| Pre-Issue | 99.39% |
| Post – issue | 60.00% |
Burger King IPO: Investor Quota and Shares Offered
| Investor Type | Quota | Shares on Offer |
|---|---|---|
| QIB | 75% | 4,04,23,729* shares |
| NII | 15% | 2,02,50,000 shares |
| RII (Retail) | 10% | 1,35,00,000 shares |
| Total | 100% | 13,50,00,000 shares |
Total QIB shares – 10,12,50,000
Burger King IPO: Day-Wise Subscription Status
| Day | Day 1 | Day 2 | Day 3 |
|---|---|---|---|
| QIB | 0.168x | 2.705x | 86.646x |
| NII | 0.709x | 3.600x | 354.111x |
| RII (Retail) | 15.542x | 37.805x | 68.144x |
| Total | 3.131x | 9.371x | 156.650x |
Burger King IPO – Risks
- Real and perceived health concerns arising from food-borne illnesses, health epidemics, food quality, allergic reactions or other negative food-related incidents could have a material adverse effect on the business, results of operations, financial condition and prospects.
- The exclusive right to develop, operate and franchise Burger King restaurants in India depends on the Master Franchise and Development Agreement, which imposes certain restrictions and other obligations on operations and the termination of which would adversely affect the business, results of operations, financial condition and prospects.
- Demand for products may decrease due to changes in consumer preferences and food habits, which could have a material adverse effect on the business, results of operations, and financial condition
- The business depends in part on the continued international success and reputation of the Burger King brand globally, and any negative impact on the Burger King brand may adversely affect the business, results of operations and financial condition
- Deterioration in the performance of, or relationships with, third-party delivery aggregators, may adversely affect the business, results of operations and financial condition
- Company may not be able to identify suitable locations and successfully develop and roll out new restaurants, and expansion into new regions and markets may present increased risks due to unfamiliarity with the areas in which its restaurants are located
- New restaurants may not be profitable or perform as planned and could also adversely impact sales in existing restaurants, which could adversely affect business, results of operations and financial condition.
- The success of the business strategy depends on the ability to establish, deliver and maintain value leadership strategy, the failure of which could have a material adverse effect on the business, results of operations and financial condition.
For complete internal and external risk factors, you can refer the DRHP of the company.
Analyst Recommendations – Should you subscribe?
Choice Broking – Subscribe
“Considering Covid-19 as an exceptional phase for the sector, we feel that with positive advancement in vaccine development and considerable relaxation in the economic activities, it is expected to report improved financials over the period,” said Choice Broking, while recommending to subscribe the Burger King IPO
Angel Broking – Attractive
“Burger King has priced its issue at a significant discount compared to Jubilant FoodWorks, so looking at the valuation and the growth the company is expected to do in the future, the issue is looking attractive to us at the first look,” said Angel Broking
Prabhudas Lilladher – Subscribe
“We recommend subscribing to Burger King India Ltd (BKIL) IPO given the brand’s success with 260 stores in just five years and a huge runway for growth with a target of 700 stores by 2026. We expect near-term financials to remain under pressure as BKIL has suffered a loss of Rs 118 crore in the first half of 2021 (H121). We expect Burger King to turnaround by FY23/24, led by post-Covid-19 recovery and benefits from rising economies of scale and new store openings.” said Prabhudas Lilladher in their recommendation.
Geojit– Subscribe
“At the upper price band of Rs. 60, BKIL is available at 29x FY20 EV/EBITDA and 3.6x FY20 EV/Sales which seems attractive considering its robust growth in-store additions and future revenue”, said Geojit while recommending “Subscribe” with a long-term perspective.
Burger King IPO: Registrar and Lead Managers
Registrar of the Issue
Link Intime India Private Limited
C 101, 247 Park, L.B.S.Marg, Vikhroli (West), Mumbai, Maharashtra 400078
Phone: 022 49186270
Email: [email protected]
Lead Managers of the Issue
- CLSA India Private Limited
- Edelweiss Financial Services Ltd
- JM Financial Consultants Private Limited
- Kotak Mahindra Capital Company Limited
