The initial public offering of Burger King India, a quick service restaurant chain and a lot famous for its burgers witnessed a strong interest from investors across different categories, reaching a subscription of over 156.65 times till 5pm on Friday which was the last and final day of bidding.
And this score helps to makes it the second most successful IPO of 2020 by highest subscription after Mazagon Dock Shipbuilders which subscribed over 157 times.
The ₹810 crore IPO has received bids of 11.67 billion against 74.49 million shares issued, according to NSE website. The high-net-worth portion was the most subscribed one followed by qualified institutional buyers and the retail investors.
Reserve portion for retail investors was oversubscribed 67.54 times and while on the other portion set aside for qualified institutional investors which subscribed 86.64 times and that of high net-worth investors 354.11 times.
Burger King India, which is currently operating a lot of franchises, about 268 stores across the country has fixed the price band at ₹59-60 per share. According to analysts, grey market premium had soared nearly 58% or ₹34-35 on the final day of subscription.
The company will get Rs450 crore from the IPO, which it has planned to use this amount and to repay its debt and for expansion plans. Existing shareholders , the private equity firm Everstone and its co-investors will take Rs360 crore from the IPO.
According to analysts, the fast-food chain is relatively cheap compared to 10.4x price to sales and 6.32x for Jubilant Foodworks and Westlife Development respectively, which runs McDonalds in certain parts of the country.
Nirali Shah, the Senior Research Analyst at Samco Securities said that by keeping the risks in mind, they advise investors to subscribe for listing gains only for now. Further improvement in bottom-line, reduction of debt and same store sales growth all these should be analysed in the following quarters to take a long-term call before investing.
The allotment for the IPO will be announced on 9 December and listing will be take place on 14th December.
Earlier on Wednesday (2nd December) , the company raised around ₹364.5 crore from a total of 55 different investors. The anchor allotment was done at ₹60 per share.
As of 30 September, the company reported a revenue of ₹135.20 crore while for the year 2020 it reported revenue of ₹841.20 crore. The company is yet to report profit, however it had been able to register decent gross margin, EBITDA and a positive operating cash flow during pre-covid times.
The company targets to have 370 stores by the end of December 2022 and around 700 stores by December 2026, a new take -off to their business. The brokerage believes that the operational efficiency and the standard operating procedure will achieve economies of scale resulting in better margins. Hence, it recommended a subscribe rating on the Burger King India IPO.