Burger King India shares available at premium of Rs 20-25 in grey market

Burger King India, the Indian subsidiary of US-based hamburger fast food restaurants chain shares are available at a premium of Rs 20-25 in the grey market as it traded at more than 40 percent premium over its issue price, ahead of its public offering.

At the lower end of the price band in percentage terms, the premium comes to 33.9 percent and 42.4 percent over IPO price, while the premium at the upper price band comes at 33.3 percent and 41.7 percent.
Burger King is the fastest-growing international QSR (quick-service restaurant) chain in India during the first five years of its operations based on the number of restaurants. Their master franchisee arrangement provides them with the ability to use Burger King’s globally recognized brand name to grow its business in India.

Burger King decided to launch its Rs 810-crore maiden public issue on December 2 and close on December 4.

The issue consists of Rs 450 crore fresh issue (which reduced from Rs 600 crore earlier due to pre-IPO placement) and an offer for sale of 6 crore equity shares by promoter QSR Asia Pte Ltd.

However, the COVID-19 crisis has a significant impact on its results of operations at the end of FY20 and in the six months ended September 2020, resulting in a decrease of revenue from the sale of food and beverages to Rs 134.69 crore in the six months ended September 2020, compared to Rs 419.37 crore in the six months ended September 2019.

In addition, although its same-store sales grew at 29.21 percent in FY19 and 6.11 percent in the nine months ended December 31, 2019, same-store sales decreased by 0.30 percent in FY20 and by 56.9 percent in the six months ended September 2020 primarily due to the impact of the COVID-19 crisis.
The company would utilize fresh issue proceeds for funding roll-out of new company-owned Burger King restaurants and general corporate purposes.

As of November 25, the filing the date for red herring prospectus, Burger King had over 259 restaurants and nine sub-franchised restaurants, of which 249 were operational, including two sub-franchised Burger King restaurants.

Under the Master Franchise and Development Agreement, the company is required to develop and open at least 700 restaurants (including Company-owned Burger King Restaurants and Sub-Franchised Burger King Restaurants) by December 31, 2026, which has recently been extended by one year from December 31, 2025, due to the COVID-19 crisis.

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