Burger King India IPO – should you apply?

Burger King is coming up with its IPO on Dec 2 2020. Here are some basic details with our analysis :

PromoterQSR Asia (owns
94.34% shares)
IPO opens onDec 2, 2020
IPO closes onDec 4, 2020
Share Listing dateDec 14, 2020
Total market cap (pre IPO)Rs 1840 Cr
Total market cap (post IPO)Rs 2020 Cr

Comparison with peers

Burger king is not yet profitable as of now. So profit and P/E ratio can not be used to compare it with its peers for valuation purpose. So we are using total sale in year 2019-2020 for bench-marking its valuation against its peers.

Company NameIncome in 2019-2020
Burger KingRs 841 Cr
JubilantRs 3927 Cr
Westlife DevelopmentRs 1548 Cr

Looking at above sale numbers, Burger King demands a market cap of approx Rs 3000-3700 Cr. Considering an IPO price of Rs 60, it will have a post IPO market cap of approx Rs 2020 Cr. So there is an upside potential of 50%-80% gain post listing.

Industry size and valuation

QSR (Quick Service restaurant) potential market size may be Rs 100000 Cr in India by 2030, and assuming Burger king will takes 10% of it in long term its market cap, so it can be Rs 10000 Cr and can become 5 times in next 10 years.

Final conclusion

There is high premium on stock price on QSR companies currently and it may see some fluctuations in short term. Considering current market sentiment, it will see some listing gain and in long term it will give good gains to investors (upto 5 times in 10 years). Short term investors can take listing gain on upside.