Burger King IPO Review

Burger King IPO (Burger King India IPO) from a quick-service restaurant chain Rs 8is for an amount of Rs. 810 crore. The Burger King IPO / Burger King India IPO / BKIL IPO is from December 2 to December 4, 2020. Burger King IPO consists of a fresh issue of Rs 450 crore and an offer for sale of 6 crore shares by the promoter QSR Asia Pte Ltd.

Burger King IPO Details

Issue Period 2-Dec-20 to 4-Dec-20
Price Band ₹ 59-60
Issue Details Fresh Issue- 450 cr + OFS upto 60,000,000 Equity Shares
Issue Size (₹ Cr) ₹ 804 Cr - ₹ 810 Cr
Issue Structure :
Bid Lot 250 Shares and in multiple
Issue Structure :
QIB 75% of offer
NIB 15% of the offer
Retail 10% of the offer ( ~13,500,000 Shares ) (₹ 81.00 Cr)
Appls for 1X Retail 54000

Updates

ANCHOR ISSUE:

About Burger King

Burger King India Limited (“BKIL”) was incorporated on November 11, 2013.
BJIL opened its first restaurant in November 2014,.
Burger King India Limited BKIL has used its well defined restaurant roll out and development process with the aim of growing quickly, consistently and efficiently into a pan India based QSR chain.
As on September 30, 2020, it had 261 restaurants which also included 8 Sub-Franchised Restaurants.
These are spread across 17 states and union territories and 57 cities across the country.
Their restaurants operate primarily in 4 different formats, which include high street locations, which typically have high impact and high visibility locations for brand awareness; shopping malls and food courts, which are both ready catchments to drive footfalls and transit locations.
These restaurants operate primarily in 4 different formats, which include high street locations, which typically have high impact and high visibility locations for brand awareness; shopping malls and food courts.

Burger King: Financials

Pros

BKIL enjoys exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India being the the national master franchisee of the Burger King brand in India.
The master franchisee arrangement, which expires on December 31, 2039, provides the ability to use Burger King’s globally recognised brand name to grow the business in India,
Company’s revenue grew at a CAGR of ~49% over FY18-FY20.
This was driven mainly driven by new store addition.
BKIL has a wide variety of 18 different vegetarian and non-vegetarian burgers
The burger king brand has good visibility among the millennials.
The company has a well-defined new-restaurant roll out process that enables them to identify locations and build new restaurants quickly.

Cons

Dependence on a single third-party distributor for purchase, supply and delivery of ingredients & packaging materials.
Competition from other established players.
Operations till date are loss making.
Royalty is more compared to Jubilant Foods.

Burger King IPO: Assessment

Everstone and US fast-food chain Burger King launched the brand in India, in 2014.
Burger King India is owned majorly by Everstone and has set up 268 restaurants in the country.
It has plans open 700 restaurants by December 2026.
The organized food services market in India currently accounts for 37.8% of total market share and is expected to increase to 50.3% by FY2025.
Out of this, the organized QSR sub-segment estimated at Rs. 348 billion in FY 2020 and is projected to grow at a CAGR of 19%.
Delivery Segment has shown the CAGR of 100% between 2016 and 2020.
The post-issue promoter stake in the company will be 60.4%.
Burger King is commanding activity in the grey market with GMP of Rs. 25-30.
Burger King IPO is priced about 2.9 x EV/sales of the company stands 23.7 x EV/EBITDA as per FY20 fiures. The correspondimg figures for Westlife Development is 4.5x nd 48.4x and for is 8.4 x and 37.6x.
Jubilant Foodworks is a much larger and more established player in this space.
Revenue wise , Domino’s accounts for 21% share, followed by McDonald’s at 11%, KFC at 10%,Subway at 6% and Burger King at 5%
Burger King is much smaller and thus has some space to grow but can also face pressure from larger peers like Jubliant Food works
With only 10% of IPO reserved for retail, chances of allotment are rather poor.
I intend to apply in Burger King IPO (Burger King India IPO). The prospects for the company seem moderate.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.