Burger King IPO subscribed over 156 times at close; grey market premium rises over 63%

By: |
December 4, 2020 5:23 PM

As the Burger King India IPO was priced lower as compared to its peers such Jubilant FoodWorks and Westlife Development, most of the analysts and brokerages recommended to ‘subscribe’ to the issue.

Burger King India, IPOBurger King India’s market capitalisation has now soared to Rs 8,363.96 crore from Rs 4,402 crore on listing day

The Rs 810-crore Burger King India initial public offer (IPO) was subscribed a whopping 156.65 times at the end of the bidding. The issue received bids for 1,166 crore equity shares against the offer size of 7.44 crore shares, according to the data available on the exchanges. The issue was sold in the price band of Rs 59-60 apiece. Even in the grey market, Burger King India shares were seen trading with a Rs 38 premium over the issue price of Rs 60 apiece, implying a 63.33 per cent premium. According to an independent dealer in unlisted shares, last week, the shares were trading at Rs 73 apiece in the grey market, which has now surged to Rs 98 apiece.

Non-institutional investors (NIIs) saw the highest subscription of 354.11 times; while the portion meant for Qualified Institutional Buyers (QIBs) was subscribed 86.65 times; and that for retail investors 68.14 times. The company reserved up to 75 per cent of the issue for QIBs, 15 per cent for NIIs and 10 per cent for the retail investors.

As the Burger King India IPO was priced lower as compared to its peers such Jubilant FoodWorks and Westlife Development, most of the analysts and brokerages recommended to ‘subscribe’ to the issue. At the upper price band, the company is valued at 23.7x EV/EBITDA considering the diluted equity shares which look attractive compared to its listed peers (i.e Westlife development – 37x and Jubilant Foodworks – 38.5x) based on FY20 numbers. “Considering, its robust franchisee model, increasing market and strong store expansion plans would enable the company to improve its growth prospects in the upcoming years,” BP Equities Institutional Research said in its report.

Analysts at KR Choksey Institutional Research said that the operational efficiency and the standard operating procedure will achieve economies of scale resulting in better margins. The changing lifestyle and the eating habits of the youngest millennial population of India will further drive the revenue of Burger King India.

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