Burger King is a chain outlet of the ‘Hamburger fast food restaurants’ of America. In India it had more than 207 outlets as of June 2019 and 261 outlets as of September 2020. Burger king falls under the segment of Quick Service Restaurants of the Chain food outlet market in India.
The Indian food market has a valuation of approximately 4200 billion Rs. out of which chain food’s market is 398 billion Rs. Out of 398 billion Rs. of the chain market, QSR (quick service restaurants) account for only 188 billion Rs.
Hence Burger king works in the market which has only 4.45% presence in the entire food market industry in INDIA. It means the market that it is involved in has a very less presence in the current Indian market.
Burger king is planning to raise 810 Crore Rs. through 13.5 crore shares. For raising such an amount it has planned to come up with Fresh issue and offer for sale.
Fresh issue – 450 crore Rs. (7.5 crore shares)
Offer for sale – 360 crore Rs. (6 crore shares)
Price band – Rs. 59 – 60 (Burger king share price for IPO)
Min investment – 15000 Rs. (250 shares)
Max investment – 195000 Rs.(3250 shares)
Amansa investment limited has bought 1.57 crore equity shares before the release of IPO. Such a buying is done through CTM (comparable transaction method) on NOV 18 at 58.5 Rs.
Hence the amount at which Amansa invested is 0.5 – 1.5 Rs. lower than the fixed price band.
Post IPO the promoter holding would decrease to 65% from the initial 99.4%.
It has not been mentioned anywhere but maybe the reason for covering these losses is to stay liquidated as the company suffered from a very high amount of loss recently due to COVID crisis. The amount of loss stands at Rs. 1189 million in the quarter ended in September. Hence the company may aim to cover up the borrowing costs and give a bit of a boost to its expansion plans due to its obligation and agreement with holding company to come up with at least 700 restaurants before 31st December 2026.
IPO bids opening date – 2nd December
IPO bids closing date – 4th December
Final allotment date – 9th December
Initiation of refunds – 10th December
Credit of shares to Demat account – 11th December
IPO Listing date – 14th December
MARCH 2019
Current ratio – 0.38
Debt- equity ratio – 2.23
Cash ratio – 0.07
SEPTEMBER 2020
Current ratio – 0.49
Debt- equity ratio – 3.54
Cash ratio – 0.18
The concern over here is the debt ratio that has been constantly in comparison to minimal increase in current and cash ratio.
| SEPT 20 (in million Rs.) | SEPT 19 (in million Rs.) | |
| TOTAL ASSETS | 11772 | 10253 |
| TOTAL REVENUE | 1516 | 4253 |
| EARNING PER SHARE | -4.14 | -0.66 |
| (LOSS) | (1189) | (174.25) |
The loss for the Sept 20 stands at almost 1189 million Rs. and the loss at Mar 20 was almost 766 million Rs. Hence it has been severely damaged by the COVID crisis.
The IPO is set to open up gates of liquidity for the company and get it closer to the aim of opening 700 outlets before 2026. But it’s too much of a risk to take as it is a continuous loss making company and has a lot of giant competitors like Jubilant foodworks which is the leader in segment and has an unsaid monopoly. Also the market size for the chain store segment is very less out there in India. Also the 1.37 crore worth of shares sold are at 58.5 Rs. before IPO which refers to the company’s immediate need for funds as it sold shares at discounted price then the actual price band. Hence one should avoid opting for this IPO if possible.
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