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Burger King IPO: Issue subscribed about 9 times on Day 2; retail portion booked 38 times

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The initial public offering of quick-service restaurant chain Burger King India has been subscribed about 9 times so far on the second day of the bidding process.

Burger King IPO: Issue subscribed about 9 times on Day 2; retail portion booked 38 times
The initial public offering of quick-service restaurant chain Burger King India has been subscribed about 9 times so far on the second day of the bidding process.
The Rs 810-crore public issue has received bids for 69.86 crore equity shares against an IPO size of 7.45 crore equity shares, data available on the exchanges showed.
The portion reserved for retail investors is oversubscribed 37.8 times so far on Day 2, while the portion set aside for non-institutional investors is subscribed 3.6 times and that of qualified institutional investors 2.7 times.
This is the sixth IPO to be fully subscribed on the first day of its bidding process, following Happiest Minds Technologies, Route Mobile, Chemcon Specialty Chemicals, Mazagaon Dock Shipbuilders and Likhitha Infrastructure.
The company has already raised Rs 364.5 crore from anchor investors on December 1, a day before the issue opening.
The price band of the IPO is fixed at Rs 59-60. The issue will close on December 4 and the shares are likely to list on December 14.
The public issue consists of a fresh issue of Rs 450 crore and an offer for sale of 6 crore equity shares by promoter QSR Asia Pte Ltd aggregating to Rs 360 crore.
Most brokerage houses have recommended a 'subscribe' rating on the issue on the back of a strong franchisee model, negative working capital, market share gains and expansion plans. Expected revenue growth and robust growth in restaurant additions following its last five-year record are also key positives.
Burger King, the second-largest burger brand globally and is the fastest-growing QSR chain with a target to reach 700 restaurants by the end of 2026.
"For now, the debt to equity ratio is comfortable at 0.8x and the CFO has improved from the negative territory to Rs 112.7 crore in FY20. The company also plans to use some of the IPO proceeds to repay its debt and for expansion plans. However, stringent rules due to a new Covid wave might disrupt its plans and could be risky for a relatively new player in India given its strong competition," said Nirali Shah, Senior Research Analyst, Samco Securities.
"At 2.7x P/Sales, Burger King is relatively cheap compared to 10.4x P/Sales and 6.32x for Jubilant Foodworks and Westlife Development respectively. Keeping the risks in mind, we advise investors to Subscribe for listing gains only for now. Further improvement in bottom-line, reduction of debt, and same-store sales growth should be analyzed in the following quarters to take a long-term call," Shah added.

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