Ashika Stock
Broking Limited
IPO Note:
Burger King India Ltd.
Issue Snapshot
Company Name Burger King India Ltd.
Issue Opens
December 02, 2020 to December 04, 2020
Price Band
Rs. 59 to Rs. 60
Bid Lot
250 Equity Shares and in multiples thereof.
The Offer
Public issue of 135,000,000 Equity shares of Face value
Rs. 10 each, (Comprising of fresh issue of 75,000,000
Equity Shares* (Rs. 450 cr.) and Offer for Sale of
60,000,000 Equity Shares (Rs. 360 cr.*) by Selling
Shareholder
“QSR
Asia Pte. Ltd.
”)
.
Issue Size
Rs. 804
–
810 Crore
IPO Process
100% Book Building
Face Value
Rs. 10.00
Exchanges
NSE & BSE
BRLM
Kotak Mahindra Capital Company Limited, CLSA India
Private Limited, Edelweiss Financial Services Limited
and JM Financial Limited
Registrar
Link Intime India Private Limited
Industry: Food services
Reco: Subscribe Date: December 02, 2020
Issue Break up
Issue Size
Allocation Equity Shares*
QIB
30%
40,500,000
Anchor Investor
45%
60,750,000
HNI
15%
20,250,000
RII
10%
13,500,000
Total Public
100% 135,000,000
Company Highlights
➢
Burger King India Limited (BKIL) is one of the fastest growing international QSR chains in India during the first 5
years of its operations based on number of restaurants (Source: Technopak).
➢
As the national master franchisee of the BURGER KING® brand in India, they have exclusive rights to develop,
establish, operate and franchise Burger King branded restaurants in India. Their master franchisee arrangement
provides them with the ability to use Burger
King’s
globally recognised brand name to grow its business in India,
while leveraging the technical, marketing and operational expertise associated with the global Burger King brand.
➢
Its master franchisee arrangement provides flexibility to tailor their menu to Indian tastes and preferences, as
well as its promotions and pricing. Their customer proposition focuses on value leadership, offering their
customers variety through innovative new food offerings at different day parts, catering to the local Indian palate,
offering a wide range of vegetarian meal options, and its taste advantage and flame grilling expertise.
➢
This has driven footfalls and same-store sales in its restaurants and enabled them to become one of the fastest
growing Quick service restaurant (QSR) brands to reach 200 restaurants among international QSR brands in India
during the first 5 years of its operations.
➢
Since opening its first restaurant in November 2014, BKIL has used its well defined restaurant roll out and
development process with the aim of growing quickly, consistently and efficiently into a pan-India QSR chain and
capitalising on the growing market opportunity in India for QSR restaurants.
➢
As of September 30, 2020, BKIL had 261 restaurants, including 8 Sub-Franchised Burger King Restaurants, across
17 states and union territories and 57 cities across India.
Equity Share Pre-Issue (Nos. Cr.)
30.7
Fresh Share (Nos. Cr.)
7.5
OFS Share (Nos. Cr.)
6.0
Equity Share Post Issue (Nos. Cr.)
38.2
Market Cap (Rs. Cr.)
2,289.9
Dilution
35.4%
Fresh
19.7%
OFS
15.7%
* Based on Higher Price Band @ Rs. 60
Objects of the Offer
Offer for Sale
The Company will not receive any proceeds of the Offer for Sale by the Selling Shareholder. (QSR Asia Pte. Ltd.)
Fresh Issue
➢
Repayment or prepayment of outstanding borrowings of the Company obtained for setting up of new
Company-owned Burger King Restaurants (Rs. 165.0 cr.);
➢
Capital expenditure incurred for setting up of new Company-owned Burger King Restaurants. (Rs. 177.0 cr.); and
Ashika Stock
Broking Limited
➢
A key focus of its business is promoting and maintaining operational quality, a people-centric culture and
effective technology systems that enable them to optimise the performance of their restaurant enhance
the customer experience they offer and contribute to their growth.
➢
Their right to use the Burger King brand exclusively on a national basis also provides them with substantial
advantages with respect to operational efficiencies and the speed with which they are able to roll out their
national advertising campaigns, manage the supply chain and tailor their menu architecture, promotions
and pricing to its
customers’
tastes and preferences.
➢
The revenue from sale of food and beverages grew from Rs. 375.2 crore in FY18 to Rs. 835.32 crore in
FY20. However, the COVID-19 crisis has had a significant impact on its results of operations at the end of
FY20 and in H1FY21, resulting in a decrease of its revenue from sale of food and beverages to Rs. 134.69
crore in H1FY21, compared to Rs. 419.37 crore in H1FY20.
➢
Same-store sales grew at 29.21% in FY19 and 6.11% in 9MFY20, the same-store sales decreased by
0.30% in FY20 and by 56.9% in H1FY21 primarily due to the impact of the COVID-19 crisis.
➢
The gross margin grew from Rs. 232.21 crore in FY18 to Rs. 536.80 crore in FY20 and decreased to Rs.
85.95 crore in H1FY21 compared to Rs. 269.94 crore in H1FY20.
View
➢
Burger King India Limited (BKIL) is one of the fastest growing international Quick Service Restaurants (QSR)
chains in India with 261 stores as on September20 (first store was opened in November 2014).
➢
Its franchisee agreement facilitates flexibility to tailor its menu according to Indian taste and preferences
along with promotions and pricing, while its customer preposition such as variety, wide range of
vegetarian offerings, taste advantage, and flame grilling experience attract customers to drive footfall in
the stores.
➢
BKIL has 5% market share in
India’s
Rs. 348 billion QSR market.
➢
The
company’s
average ticket value stands at Rs. 500-550.
➢
As of September 30, 2020, BKIL had 261 restaurants, including 8 Sub-Franchised Burger King Restaurants,
across 17 states and union territories and 57 cities across India. The company aims to have 370 stores by
the end of December 2022 (700 stores by December 2026).
➢
BKIL plans to continue to build its restaurant network using a cluster approach and penetration strategy
with the objective to provide greater convenience and accessibility for customers across relevant
geographies. BKIL owns around 97% of the total outlets in India. Management is confident of achieving
the target of opening 700 outlets PAN India by extended timeframe up to December 2026 despite current
slowdown witnessed following a pandemic.
➢
Covid-19 had significant impact on H1FY21 performance of BKIL with same-store-sales growth down by
59%, as a large number of stores was non-operational during the period (revenue down by ~68% and the
company registered an operating loss of Rs. 3.9crore).
➢
According to RHP, H2FY21 is expected to be better than H1 as most cities have removed restrictions.
➢
In terms of the valuations, on the higher price band, BKIL demands EV/EBITDA multiple of 22.3x based on
post issue fully diluted equity.
➢
Strong franchisee model, exclusive national franchise rights in India, negative working capital, strong
customer proposition, market share gains from standalone players, vertically managed and scalable supply
chain coupled with well-defined restaurant roll out, strong store expansion plans and experience and
passionate team are some of the key strengths of the company, which will help in improving growth
prospects and post good operational performance in the coming years.
Ashika Stock
Broking Limited
Heads
Domino’s
McDonald KFC
Subway
Burger
King
Pizza
Hut
Chilli’s
BBQ
Nation
The Great
Kebab Factory
Format
QSR
QSR
QSR
QSR
QSR
CDR
CDR
CDR
FDR
Business Model
Master
Franchisee
Master
Franchisee
Multiple
Franchisee
Micro
Franchisee
Joint
Venture
Multiple
Franchisee
Regional
Franchisee
Own
Franchisee
Own
Franchisee
Outlet Count
1,354
311
454
541
261
431
21
147
23
APC (
₹
)
200 -225
225 -250
200 -225
175 -200 200 -225
400 -450
600 -700
775 -800
1250 -1500
Average Ticket
Value (
₹
)
500 -550
550 -600
500 -550
250 -300 500 -550
1450 -1550 2750 -3000 3500 -3750 6000 -6500
COGS
22-23%
34-36%
34-36%
32-34%
35-36%
25-26%
29-30%
34-35%
31-32%
Gross Margins
77 -78%
64-66%
64-66%
66-68%
64-65%
74-75%
70-71%
65-66%
68-69%
Advertisement
4-5%
5-6%
6-7%
4-5%
~5%
4-5%
3-4%
NA
5-6%
Royalty
3-4%
4-5%
7-8%
7-8%
4-5%
7-8%
5-6%
NA
6-7%
Store EBITDA
21-23%
13-15%
14-16%
20-22%
12-14%
17-19%
20-21%
20-21%
16-18%
Capex for Initial
Build & Opening
150-200L
350-400L
300-350L
40-50L
200-250L
200-250L
300-350L
250-300L
400-500L
Avg. Store Size
(Sq.ft.)
1400 -1600 2600 - 3200 2500 -3000 750 - 1000 1300 -1400 2600 -3200 3700 -4300 4800 -5400 4500 -5000
Average sales /
Day
0.75-0.80L 1.2-1.3L
1.2-1.3L
0.30-0.35L 1.1-1.2L
0.7-0.8L
1.4-1.5L
1.5-1.6L
1.9-2.1L
Brands
Outlet
Total
Count
Mega Metros
Mini Metros
Tier I
Tier II & Others
Outlet
count
% to total
outlet count
Outlet
count
% to total
outlet count
Outlet
count
% to total
outlet count
Outlet
count
% to total
outlet count
Domino’s
1,354
339
25%
433
32%
271
20%
311
23%
Subway
541
135
37%
173
43%
108
12%
124
8%
McDonald’s
481
120
36%
154
35%
96
17%
111
12%
KFC
454
114
19%
145
37%
91
21%
104
23%
Wow! Momo
317
79
29%
101
59%
63
6%
73
6%
Burger King
261
65
41%
84
26%
52
11%
60
23%
Jumbo King
131
33
83%
42
11%
26
6%
30
-La Pino’z
134
34
27%
43
21%
27
33%
31
19%
Haldiram
80
20
79%
26
9%
16
7%
18
5%
Bikanervala
82
21
61%
26
9%
16
14%
19
16%
Smokin Joe’s
50
13
58%
16
20%
10
4%
12
18%
Taco Bell
57
14
32%
18
54%
11
12%
13
2%
Street food by Punjab Grill
41
10
47%
13
34%
8
12%
9
7%
The key QSR brands outlet presence as of September 30, 2020
The business model of the key brands in India
The geographical penetration of chain QSR brands as of September 30, 2020
Brands
Outlet
Total
Count
North (%)
South (%)
East (%)
West (%)
Outlet
count
% to total
outlet count
Outlet
count
% to total
outlet count
Outlet
count
% to total
outlet count
Outlet
count
% to total
outlet count
Domino’s
1,354
447
33%
379
28%
162
12%
366
27%
Subway
541
206
38%
146
27%
38
7%
151
28%
McDonald’s
481
154
32%
135
28%
10
2%
183
38%
KFC
454
132
29%
182
40%
77
17%
64
14%
Ashika Stock
Broking Limited
(In Rs. Cr)
FY18
FY19
FY20
H1FY20
H1FY21
Cash flow from Operations Activities
30.5
86.5
112.7
73.8
9.6
Cash flow from Investing Activities
12.8
(114.0)
(230.4)
(71.4)
(27.8)
Cash flow from Financing Activities
(48.4)
36.1
105.9
(5.9)
23.3
Net increase/(decrease) in cash and cash equivalents
(5.2)
8.7
(11.8)
(3.5)
5.1
Cash and cash equivalents at the beginning of the year
12.4
7.2
15.9
15.9
4.1
Cash and cash equivalents at the end of the year
7.2
15.9
4.1
12.3
9.2
Source: RHP
Comparison with listed industry peers
Financial Statement
Cash Flow Statement
(In Rs. Cr)
FY18
FY19
FY20
H1FY20
H1FY21
Share Capital
265.0
265.0
277.7
266.6
290.9
Net Worth
287.1
249.6
275.4
237.4
218.9
Long Term Borrowings
0.0
0.0
178.8
38.5
176.0
Other Long Term Liabilities
356.3
456.8
586.1
507.0
582.1
Short-term borrowings
0.0
100.0
19.7
100.0
19.8
Other Current Liabilities
86.9
114.0
137.7
142.3
180.4
Fixed Assets
602.6
812.8
1084.2
927.8
1047.5
Non Current Assets
18.7
26.1
33.5
46.7
33.2
Current Assets
109.1
81.5
79.9
50.7
96.4
Total Assets
730.4
920.5
1197.7
1025.2
1177.1
Revenue from Operations
378.1
632.7
841.2
422.3
135.2
Revenue Growth (%)
67.3
33.0
(68.0)
EBITDA
8.1
79.0
104.0
57.0
(28.7)
EBITDA Margin (%)
2.1
12.5
12.4
13.5
(21.2)
Net Profit
(82.2)
(38.3)
(76.6)
(17.4)
(118.9)
Net Profit Margin (%)
(21.7)
(6.0)
(9.1)
(4.1)
(88.0)
Earnings Per Share (Rs.)
(3.1)
(1.4)
(2.9)
(0.7)
(4.1)
Return on Networth (%)
(28.6)
(15.3)
(27.8)
Net Asset Value per Share (Rs.)
10.8
9.4
10.3
7.6
Source: RHP, Ashika Research
Co Name
Net Sales
(Rs. Cr.)
OPM
(%)
D/E
(x)
ROCE
(%)
RONW
(%)
P/BV
(x)
EV/EBIDTA
(x)
Market Cap
(Rs. Cr.)
Burger King
841.2
12.4
0.1
14.3
-27.8
3.4
22.3
2289.9
Jubilant FoodWorks
3927.3
24.1
0.0
47.7
23.5
29.3
43.3
32961.9
Westlife Development
1547.8
14.7
0.3
9.1
-1.3
14.0
67.8
6778.6
Growth in
company’s
Restaurants since March 31, 2015
FY15
FY16
FY17
FY18
FY19
FY20
H1FY21
By Region
North
6
21
37
55
86
129
131
West
6
14
29
40
55
68
66
South
0
14
22
34
43
54
55
East
0
0
0
0
3
9
9
Total
12
49
88
129
187
260
261
By operating structure
Company owned
12
48
85
123
181
252
253
Sub-franchised
-
1
3
6
6
8
8
Total
12
49
88
129
187
260
261
Ashika Stock
Broking Limited
Ashika Stock Broking Limited(“ASBL”)started its journey in the year 1994, and is presently offering a wide bouquet of services to its valued clients including broking services, depository services and distributorship of financial products (Mutual funds, IPO & Bonds). It became a“Research Entity” under SEBI (Research Analyst) Regulations 2014 in the year of 2015 (Reg No. INH000000206).
ASBL is a wholly owned subsidiary of Ashika Global Securities (P) Ltd., a RBI registered non-deposit taking NBFC Company. ASHIKA GROUP (details enumerated on our websitewww.ashikagroup.com) is an integrated financial service provider inter alia engaged in the business of Investment Banking, Corporate Lending, Commodity Broking, Debt Syndication & Other Advisory Services.
There were no significant and material disciplinary actions against ASBL taken by any regulatory authority during last three years except routine matters.
Disclosure
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TIRTHAN
KAR DAS
Digitally signed by TIRTHANKAR DAS Date: 2020.12.02 11:28:40 +05'30'
