The Rs 810 crore Burger King IPO got fully subscribed on Wednesday, within two hours of the kick's start of the bidding process on Day 1. At 3:30 pm, the issue received bids for 12,52,02,250 shares, which was 2.42 times the issue size of Rs 7,44,91,524 shares.
The IPO consisted of a fresh issue of Rs 450 crore and an offer for sale (OFS) of up to 6 crore shares, aggregating Rs 360 crore. It is being sold at the price band of Rs 59-60 apiece. Retail investors willing to invest can buy a lot of 250 shares and a maximum of 3,250 shares.
The company had on Tuesday raised Rs 364.5 crore from anchor investors.
AT an upper price band of Rs 60, the IPO is valued at a price-to-sales ratio of 2.7times based on FY20 sales, compared with peers Jubilant FoodWorks' 8.4 times and Westlife Development's 4.4 times. On a per store basis, market cap to total stores stands at Rs 8.8 crore compared with jubilant Foodworks' Rs 26.2 crore and Westlife's Rs 23.80crore.
"The valuation seems reasonable when compared to peers. While the covid-19 crises have impacted short term growth, we believe the company remains well placed for long term growth, we believe the company remains well placed for long term growth, given its strong brand position, diverse food offerings, well-established supply chain, aggressive expansion plans, cost management efforts, and benefit from the gradual recovery in the QSR industry post-Covid," Anand Rathi said.
Choice Broking said that the company is in a growth phase and has scheduled an aggressive restaurant expansion plan. "Considering Covid-19 as an exceptional phase for the sector, we feel that with positive advancement in vaccine development and considerable relaxation in the economic activities, Burger King is expected to report improved financials over the period. Considering the discounted valuations, we assign a 'subscribe' rating to the issue," it said.
Benefiting from reduced competition from unorganized smaller local restaurants due to Covid related disruptions and expansion of food delivery businesses, the company is well-positioned to expand its footprint in India, said ICICI Securities.
"We believe BKI would be able to capture the growth largely aided by changing habits of eating out/ ordering outside food. The company was quick to scale up its operating margins to double digits in the last two years. However, it is still making a loss at the bottom line level due to high depreciation provisions. We have a subscribe recommendation on the stock," the brokerage said.
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