Burger King IPO to Hit the Market by April

Quick service restaurant chain and fast-food giant Burger King India has received SEBI approval to go public.

Burger King is already a 202 restaurant strong brand. Outlets can be found at strategically handpicked locations such as metro stations and key shopping-dining hotspots among other high footfall locations.

It has achieved this presence within about six years, since its market entry in 2014. Now Burger King India intends large scale expansion. This is the reason for launching its initial public offering. The QSR chain had filed its draft IPO papers with SEBI in November 2019. The approval came through at the end of January.

With a green signal from SEBI, Burger King is reportedly looking to have fresh equity shares worth a total of Rs 400 crore hit the market by next month, that is, April. Additionally Rs 6 crore worth of equity shares of QSR Asia, Burger King’s promoter, will be up for sale.

Should investors and stock market watchers be excited about this upcoming IPO? Well, according to Technopak, the brand is one of the fastest-growing international QSR chains in India. Additionally, here are 10 key figures to consider:

1. Burger King’s over 200-restaurant-strong footprint straddles 16 states and 47 cities. It currently has 7 sub-franchised restaurants.
2. It has plans to scale up its presence to 325 restaurants. That’s an ambitious plan to expand by over 50%. This will also include sub-franchised restaurants.
3. In the last fiscal it expanded its presence by 58 restaurants. At the current pace, one can assume that the additional 120 outlets can be up and running within two years. However, Burger King said in a statement that it intends for the roll-out to be completed by December 31, 2020.
4. According to Burger King’s website, in FY 2019 turnover was Rs 6,441 million.
5. Thus turnover represented a 66% growth over last year.
6. Burger Kinghas thus far been operating in the Indian market for 6 years.
7. Revenue from F&B sales was Rs 6,285.86 million in FY 2019. Over a two-year horizon, this represents almost 3x growth because in 2017 revenue stood at Rs 2,282.86 million.
8. Revenue from overall operations for 2019, that totaled Rs Rs 6,327.35 million, was almost double that of 2018 which also stood at sizeable Rs 3,781 million.
9. Same store sales grew 29.21% in FY 2019.
10. Gross margin was 4,003.58 million in FY 2019.

The initial sale of shares is expected to be overseen by CLSA India Pvt Ltd, Edelweiss Financial Services, JM Financial, and Kotak Mahindra Financial Company.

The shares of the company will reportedly be listed on BSE and NSE.

Roadshows are scheduled to begin next week and conclude by the end of the month, that is they will take place between mid-March and end-March.

Industry wise, F&B stocks attract investors because of the fact that they tend to attract sustained demand. QSRs currently account for 20% of the restaurant space in the country. Moreover, the sector is growing at 6% per year. Delivery apps such as Swiggy, Scootsy and Zomato have created a positive environment for the QSR sector.

QSR stakeholders are optimistic about industry growth. For example, Kabir Jeet Sing who also owns a homegrown QSR startup Burger Sing, indicates that Budget 2020’s move towards increasing consumption could also positively contribute to a further rise in demand for quick-fix meals among busy executives.

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