Mr. Keshav Lahoti - Associate Equity Analyst, Angel Broking Ltd
Burger King is the fastest growing international QSR chain in India during the first five years of their operations based on the number of restaurants. (Source: Technopak). Their master franchisee arrangement provides them with the ability to use Burger King's globally recognised brand name to grow their business in India. The Burger King brand is the second largest fast food burger brand globally as measured by the total number of restaurants, with a global network of over 18,000 restaurants in more than 100 countries and U.S. territories as at June 30, 2019.
Burger King Issue will open from December 2, 2020 to December 4, 2020. Issue price is Rs-59-60 per share and market lot is of 250 shares. Issue size is of Rs.810 cr which comprises fresh issue of Rs.450 cr and offer for sale of Rs.360 cr. Purpose of the issue is to finance the roll-out of new company-owned Burger King Restaurant and to meet the general corporate purposes. Kotak Mahindra Capital, CLSA India, Edelweiss Financial Services and JM Financial are book running lead managers.
Burger King is growing rapidly in India, revenue of the company increased from Rs. 230 cr in FY17 to Rs. 633 cr in FY19. On the other hand, the company has reduced its losses from Rs. 72 cr to Rs. 38 cr from FY17 to FY19. Burger King peer Jubilant Foodworks is currently trading at 8.7 EV/sales on FY20 basis. We believe Burger King won't get such a premium valuation as Jubilant Foodworks as it does not have a profitability track record like Jubilant, its outlets are young and we believe majority of the Indian people prefers Jubilant - Pizza over burger sold by Burger King. So Burger King has priced its issue at a significant discount compared to Jubilant Foodworks, so looking at the valuation and the growth the company is expected to do in the future, the issue is looking attractive to us at the first look.