• Hanamant Kullur

BURGER KING IPO 2020 REVIEW:- GOOD TO BUY or NOT ??

BURGER KING IPO 2020 REVIEW:- GOOD TO BUY or NOT ??

Burger King IPO is scheduled to open on 2 December, leading the pack of IPO hopefuls for the next month. Priced in the range of INR59 – 60 per share, the offer has already sparked interest in them with healthy margins. Through the Burger King IPO review, we try to understand if the stock should be part of investors’ portfolio.


Burger King India IPO details

Burger King IPO Review: A strong and growing brand

After opening its first restaurant in November 2014, Burger King has come a long way in India. The chain’s outlet reach stood at 261 restaurants, including eight sub-franchised restaurants as of 30 September 2020. These outlets were spread across 17 states and union territories and 57 cities across India. By the end of the calendar year 2021, the company plans to expand its network to 300 outlets.


Burger King is a globally known brand and enjoys strong brand recall value among millennials – its target customers – in India as well.

Burger King IPO Review: Financial performance on a slippery slope

As is the case with most companies in the growth phase, Burger King has registered higher revenues in each of the last 3 years. However, this streak appears to be coming to an end in FY2021 due to the pandemic.

The company has not been profitable in these years and the impact of Covid-19 is clearly visible in its profits during the latest six months.

Burger King’s financial performance (in INR crore)

Burger King IPO Analysis: Should you invest?

Given that packaged food and food services are likely to remain under pressure, it is unlikely that Burger King will run away post listing. In the event of markets tanking from here, it is also possible to see better price points in Burger King post-listing. As such, it is a question if investors are willing to hold the stock for a longer timeframe after listing.

Looking at the longer term and its valuations, it may not be a bad idea to hold the shares for the long term. Burger King has priced its offer at the market cap to sales ratio of 3.5 which is lower than 4.5 for Westlife Development and 8.5 for Jubilant FoodWorks. Similarly, market cap by EBITDA metric shows Burger King is priced attractively at a discount to its listed peers.

Conclusion:-

Overall, Burger King IPO analysis reveals that the brand with a solid market standing has a long runway of growth but immediate gains post listing may be capped.