The maiden issue public issue of Burger King India, a national master franchisee of the Burger King brand in India has opened for subscription today and will be available for subscription till the 4th of December 2020.
One of the fastest-growing international quick-service restaurants (QSR) chain in the country, Burger King India has an exclusive right to develop, establish, operate Burger King brand restaurants in India. The company intends to use the proceeds on rolling out of new company-owned Burger King restaurants and repayment of outstanding borrowings.
Some quick facts about the Burger King India\’s IPO:
The price band for the IPO is set at Rs 59-60.
The minimum lot size is of 250 shares. An individual retail investor can bid for a maximum of 3,250 shares.
The issue size for Burger King India IPO is Rs 810 crore at the higher price band.
Shares of Burger King India are expected to be listed around December 14, 2020.
Key opportunities for the company
Despite a temporary disruption due to COVID -19 pandemic, India\’s QSR market has tremendous potential for growth due to a variety of reasons such as including a rising number of nuclear families, increasing disposable incomes, growing millennial population, urbanisation, changing consumption patterns.
Widespread mobile usage and high-speed internet connectivity, the rise of tech-savvy customers along with the convenience of online food ordering through delivery aggregators such as Swiggy and Zomato, offers enormous opportunity for companies operating in the QSR industry.
Key challenges to consider while investing in Burger King India\’s IPO
In its Red Herring Prospectus, Burger King India has stated that the outbreak of COVID-19 pandemic had a significant impact on its operations since the last week of March, resulting in a temporary shutdown of 201 restaurants. Due to the pandemic, sales of the company had declined to Rs 134.6 crore for the period between April to September 2020 as compared to Rs 419.3 crore the corresponding period in the previous year.
As of September 20, a total of 261 restaurants of Burger King India were running across the country.
The Red Herring Prospectus filed by Burger King India with SEBI also states that termination of the master franchise and development agreement would have a material adverse effect on their business, results of operations, financial condition and prospects.
Comparison with peers
As compared to the 261 restaurants operated by Burger King India, its peers in the QSR space in India, Domino’s Jubliant Foodworks operates 1354 outlets in the country while Westlife Development’s MacDonalds operates 481 outlets.
Before investing in an IPO or any stock in the secondary market, it is very important to do a detailed research with respect to company\’s financial statements, key ratios and future growth prospects. Click here for a winning portfolio of well-researched multibagger stocks.