Burger King shares see blockbuster listing, shareholders' wealth doubles

14-12-2020

Shares of fast-food chain Burger King made a blockbuster listing on the bourses on Monday, rising nearly 100 against its issue price of Rs 60 apiece. On the Bombay Stocks Exchange, the stock settled at Rs 115.35 in the pre-opening session and started trading from Rs 116 and made a high of Rs 119.50, doubling investors' wealth in just one day. As of 10:05 am, Burger King shares traded 87.25% higher at Rs 112.35 apiece. Analysts were hopeful of a strong listing considering the over 150-times subscription to the IPO, cheaper valuation compared to listed peers such as Jubilant Foodworks and Westlife Development and consistent addition of company-owned restaurants. The Rs 810-crore public issue of Burger King, which was open for subscription between December 2-4, received second highest subscription of 156.65 times in 2020. Athough the company so far has not made any profit on the net basis, analysts expect it to float into profit zone from loss as demand normalises and people resume dining out. At the issue price of Rs 60, Burger King shares were valued at 2.7 times its FY20 revenue as compared to 8.5 times for Jubilant FoodWorks and 4.4 times for Westlife Development. Brokerage firm Sharekhan mentioned in its IPO note that strong franchisee model, negative working capital, market share gains from standalone players, and strong store expansion plans would help Burger King in improving growth prospects of the company in the coming years. The company aims to increse the total store count to 370 by the end of 2022 and to 700 by the end of 2026. Out of the IPO proceeds of Rs 450 crore, the company plans to use Rs 177 crore for this purpose. The company was incorporated in 2013, by QSR Asia. It has exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in the country. At present, it is one of the fastest-growing quick service restaurants (QSR) in India. After opening the first outlet at the end of 2014, it had 261 restaurants as of September 30, 2020.