Burger King is the second largest fast food brand globally with a global network of over 18,000 restaurants in more than 100 countries. QSR Asia is their holding company. The company is the national master franchisee of the Burger King brand in India, with exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India. As at September 30, 2020, Burger King had 261 restaurants, including 8 Sub-Franchised Burger King Restaurants, across 17 states and union territories and 57 cities across India. The company plan to have approximately 300 restaurants, including Sub-Franchised Burger King Restaurants, open by December 31, 2021.
Promoter – QSR Asia – Selling 19.6% stake of Pre issue Equity
|Objects of the issue||
Issue Size – 810 Crore
Offer for Sale- 360 Crore
Fresh Issue- Rs.450 Crore
|Face value||Rs.10 Per Equity Share|
|Issue Price||Rs. 59 – Rs. 60|
|Bid Lot||250 shares|
|Issue Opens:||2nd December 2020 – 4th December 2020|
|QIB||75% of Net Issue Offer|
|NIB||15% of Net Issue Offer|
|Retail||10% of Net Issue Offer|
|Shareholding Pattern||Pre- Issue||Post Issue|
|Promoters & Promoters Group||94.34%||60.08%|
Source: DRHP, EWAL Research
Exclusive national master franchise rights in India
Strong customer proposition
Vertically managed and scalable supply chain model
Brand positioned for millennials
Revenue of the company increased from Rs 230 crore in financial year 2017 to Rs 633 crore in financial year 2019. On the other hand, the company has reduced its losses from Rs 72 crore to Rs 38 crore between the same time period.
The company’s food and beverages revenues jumped over 2-fold to Rs 835.32 crore in FY20 from Rs 375.20 crore in FY18. That said, the Covid crisis has had a significant impact on its results, with the six-month sales falling to Rs 134.69 crore compared with Rs 419.37 crore in the same period last year.
Burger King has fixed royalty fee at 5% which is very competitive.
Total Debt of the company stood at Rs.198.34 as on 30th Sep,2020 crore out of which Rs. 164.98 crore would be paid out from fresh issue proceeds.
Real and perceived health concerns arising from food-borne illnesses, health epidemics, food quality, allergic reactions could have a material adverse effect on business of the company
In The termination of Master Franchise and Development Agreement would have a material adverse effect on o business, results of operations, financial condition and prospects.
Reported a restated loss in Fiscal 2018, 2019 and 2020 and for the six months ended September 30, 2019 and September 30, 2020 and may incur additional losses in the future.
Burger King India is one of the fastest growing QSR in India and is the only Company to open 200+stores in less than 5 years. We expect near term financials to remain under pressure as Burger King has suffered a loss of Rs118 Crore in 1H21. we expect Burger King to turnaround by FY23/24 led by post Covid recovery and benefits from rising economies of scale and new store openings. Burger King operates in chain QSR market in India which is expected to grow at 22.8% CAGR to Rs524bn by FY25. Listed firm Westlife Development runs McDonald’s restaurants is the key peer of Burger King. Jubilant Foodworks, which runs Domino’s in India, also can be seen as the company’s peer. In terms of the FY20 Enterprise Value relative to EBITDA, the IPO is priced at 29.5 times compared to 31 times of Westlife. Therefore we recommend to Subscribe IPO.
DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014
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