Quick services restaurant (QSR) chain Burger King India attracted huge buying interest on its listing day, as the stock more than doubled on December 14.
After its initial public offering was subscribed 156.65 times, the stock opened with a massive premium of 92.3 percent at Rs 115.35 and marched higher to close at the day's high of Rs 138.40 on the BSE.
It shot up 130.67 percent over the IPO price of Rs 60 and was locked at 20 percent upper circuit from its opening level.
On the National Stock Exchange, Burger King shares closed at the day's high of Rs 135, rising 125 percent from its issue price and 20 percent from the opening price of Rs 112.50.
In terms of volumes, it traded with a volume of 1,91,54,767 equity shares on the BSE and 18,67,92,834 shares on the National Stock Exchange.
Bumper opening for Burger King: Should investors sell or hold?
At the CMP, "Burger King is valued at 5.7x FY20 Price/sales and 17.3x FY20 P/BV which fully captures its strong brand positioning, robust store expansion plans and the bright growth prospects of the QSR industry in India. However given its weak financials, the valuation seems a little stretched versus players like Jubilant FoodWorks and Westlife Development," said Hemang Jani, Head-Equity Strategy, Broking & Distribution at Motilal Oswal Financial Services.
One of the fastest-growing international QSR chains in India, Burger King India raised Rs 810 crore via its IPO during December 2-4. The company will use proceeds for debt repayment and store expansion.
The company enjoys exclusive national master franchisee rights in India till December 2039, with an obligation to develop and open at least 700 restaurants by December 2026.
One of the fastest-growing QSR chain in India, Burger King has 268 restaurants spread across 57 cities. It has already garnered a 5 percent market share in India's Rs 34,800 crore QSR market.
In the future, "we expect the company to gain market share by opening more stores compared to the competitors. As the store count will increase, operating leverage will kick in and the company will be able to report profit and it will lead to re-rating of the multiple for the stock," Keshav Lahoti, Associate Equity Analyst at Angel Broking said.
Over FY18-20, Burger King's revenue grew at a CAGR of 49 percent and EBITDA 258 percent led by 2x the store strength. However, it continued to make losses at PAT level.