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The initial public offer (IPO) of Burger King, the second-largest fast food burger brand globally, opens for public subscription on 02 Dec 2020 (till Dec 04).
Also Read : How to Apply for IPO online (step by step guide)
Here are 10 key things that you should know before you subscribe.
Burger King is the India's fastest growing quick service restaurant chains. It is the second largest fast food burger brand with having 216 Burger-King restaurants and 8 Sub-Franchised Burger King restaurants.
It has an exclusive right to establish, develop, and operate Burger King branded restaurants in India. It aims to cater to the Indian tastes and preferences through adding new food offerings to its product portfolio. Company establishes its branches in high traffic areas in key metropolitan areas and cities across the country.
2) IPO Details:
IPO Date: Dec 2, 2020 - Dec 4, 2020
Face Value: ₹10 per equity share
IPO Price: ₹59 to ₹60 per equity share
Market Lot: 250 Shares
Min Order Quantity: 250 Shares
Listing At: BSE, NSE
Bid/Offer Opens On: Dec 2, 2020
Bid/Offer Closes On: Dec 4, 2020
Finalisation of Basis of Allotment: Dec 9, 2020
Initiation of Refunds: Dec 10, 2020
Credit of Shares to Demat Acct: Dec 11, 2020
IPO Shares Listing Date: Dec 14, 2020
3) Market share by Revenue:
4) Grey market premium
The grey market suggests a premium of 56% over the issue price band of ₹59-60 per share.
The company's revenue grew around 49% CAGR over FY18-FY20 led by significant store additions. Gross margin has improved consistently from 62% in FY18 to 64 % in FY20 and earnings before interest, tax, depreciation, and ammortisation (Ebitda) grew from Rs 8 crore to Rs.104 crore, during the same period.
6) Peer Comparison & Valuations
In the Indian QSR segment, Burger King competes with McDonalds and Domino’s Pizza. Among non-listed peers are KFC, Subway and Pizza Hut, besides local restaurants in the segment.
Valuation: At the higher price band of Rs 60 per share, Burger King's share is valued at an EV/sales multiple of 5.2x, which is at a discount to the peer average of 8.9x Among its key competitive strength are exclusive national master franchise rights in India, strong customer proposition, brand positioned for millennials, vertically managed and scalable supply chain model, operational quality, well defined restaurant development process, and experienced, passionate and professional management team.
7) Few Random Important Facts:
a) This isn’t Burger King USA. This is Burger King India — owned by another company QSR Asia.
b) Burger King India is required to pay a one-time outlet opening fee of $25,000 coupled with a monthly royalty of 2.5%–5% of sales to Burger King Asia Pacific.
c) They have 261 outlets today compared to 12 outlets they had back in 2015.
d) As part of Burger King’s franchise agreement, they are obligated to open at least 700 stores by December 2026 even if the same-store sales growth stagnates.
e) During the six months between March and October, Burger King’s revenue tanked 68% compared to the sales figure last year.
f) Burger King average order value is 500-550 Rs. and average daily sales/store is around 1.15 Lacs Rs..
The net proceed from the IPO will be used towards following purposes;
1) To finance the roll-out of new company-owned Burger King Restaurants.
2) To meet the general corporate purposes.
- Strong customer value preposition.
- Exclusive franchise rights in India.
- Brand value and customer loyalty.
- Vertically scalable supply chain.
- Experienced and professional management team.
- The outbreak of the Covid-19 pandemic.
- Real and perceived health concerns arising from food-borne illnesses, health epidemics, food quality, allergic reactions or other negative food-related incidents.
- The termination of master franchise and development agreement.
- Demand for products may decrease due to changes in consumer preferences and food habits.
- Business depends in part on the continued international success and reputation of the Burger King brand globally, and any negative impact on the brand may have an adverse impact.
- Deterioration in the performance of, or its relationships with, third-party delivery aggregators.
- Inability to identify suitable locations and successfully develop and roll out new restaurants, and expand into new regions and markets.
Note: Data has been taken from Bloombergquint, ET and BusinessLine
Suggestion: Apply for only 'one lot' and Subscribe this issue for big listing gains as well as for long term investment.
Research Analyst (SEBI Regd.)
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