Burger King IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Burger King IPO– Company is 2nd largest burger chain in India, started operation in 2014 and fastest international brand to have 200 QSR outlets in Inda

Plan is to target 700 outlets in next 5-6 years.

Offer purpose — Offer for sale (360cr) plus fresh issue of 450 cr. To open new stores and pay some part of loan

Key Service domains – 2nd largest burger chain after McDonald

Risks —

Loss making company as of now. Loss of 119+ cr in six months of current FY21, loss of 76 cr in last year FY20

Offer on food tech apps may harm the business wrt competitors plus McDonald, Jubilant food will definitely try to defend the market share

Fast expansion may lead to more losses in coming years but its a double edged sword and can lead to gains as well

Strength

Post COVID –company will have lean structure and business should have good unit economics

Also because of urban developments and more money in hands to spend, culture of eating in QSR will support the company

Fast expansion can help the company in increasing mkt share

Future

QSR is thriving industry and consumption food business will gain. QSR CAGR expected to grow >20% for next 4-5 yrs

Sustainability looks good, McDonald, Dominos, Subway, KFC have already survived and adapted

Valuations

Loss making company and PE is negative

Last 3 Yr Revenue CAGR at 53.4%; Total Debt as of Sep 2020 at 195 Cr

As compared to peers , valuations are reasonable in terms of mcap/sales or mcap/ebitda

Should we apply?

People can subscribe looking at growth prospects

Listing day may see good gains. Recommended to hold long

If available on listing day around 50-70 Rs, one should add more from 3-5 yrs perspective for possibly good gains

Also Read

UTI AMC IPO crisp Summary — Listing with loss as shared

CAMS IPO crisp summary — Listing with 20% gains as shared

Angel Broking IPO crisp summary –Listing with loss as shared

Happiest Minds IPO crisp summary –Listing with substantial gains as shared

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