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Burger King India IPO: Listing gains in offing; retail quota subscribed nearly 37 times so far

Burger King has strong brand positioning, robust store expansion plans and the bright growth prospects of the QSR industry in India.

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Burger King will raise Rs 450 crore from the issue while Rs 360 crore will come from the Offer For Sale (OFS) for the promoters of the firm
Burger King India initial public offer (IPO) received a robust response from retail investors on the day one of the bidding process. The Rs 810-crore issue received bids for 64.08 crore shares against 7.44 crore equity shares on offer, implying an overall 8.60 times subscription, so far. Most of the brokerages suggest to subscribe to one of the fastest growing international QSR chains in India for the listing gains. The issue is being sold in the price band of Rs 59-60 apiece. Link Intime India Pvt Ltd will manage allocation and refund of the issue and is the registrar of Burger King India IPO.

According to the exchange data, retail portion saw nearly 37 times applications as retail had the lowest allocation quota of only 10 per cent. While, non-institutional investors (NIIs) and Qualified Institutional Buyers (QIBs) subscribed 3.32 times and 1.79 times, of their respective quotas. These two categories usually subscribe the most on the last day of the three-day bidding process. Burger King India has reserved up to 75 per cent of the issue for QIBs while 15 per cent for NIIs.

Subscribe to Burger King India for listing gains

Analysts at GEPL Capital recommend to ‘subscribe’ to Burger King India IPO for listing gains. At the upper price of Rs 60, the offer is priced at 14.8x FY20 CFO (cash flow from operations) per share. “As a long-term investment, we would wait a few quarters for signs of a sustainable recovery in the same-store sales growth and the ability to repay the pending obligations with a sustainable debt to equity,” Gaurav Hinduja, Associate Analyst at GEPL Capital said.

Research and brokerage firm Motilal Oswal Financial Services has also suggested to subscribe to the issue for listing gains. The brokerage firm said that considering Burger King India’s strong brand positioning, robust store expansion plans and the bright growth prospects of the QSR industry in India, it expects its financials to improve going ahead. The net debt/equity as of Sep’20 stood at 3.3x which post IPO will reduce to zero.

Burger King is one of the fastest-growing QSR businesses in India; it has been growing at a CAGR of 98% over 5 years bearing Covid-19 impacted quarter. “We, therefore, expect the growth trajectory will continue and its financial position to improve going ahead. Therefore, we recommend to subscribe over the issue,” said analysts at Dealmoney Securities.

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