Mumbai: The initial public offering of Burger King India, a quick-service restaurant chain, witnessed a lot of interest from investors across all categories, reaching a subscription of more than 157.16 times as of 5pm on Friday, the last day of bidding.
This makes it the second most successful IPO of 2020 by subscription after Mazagon Dock Shipbuilders, which was subscribed more than 157.41 times.
the ₹The Rs 810 million IPO has received offers of 11.67 billion against 74.49 million shares issued, according to the NSE website. The high net worth portion was the most underwritten followed by qualified institutional buyers and retail investors.
The reserve portion for retail investors was oversubscribed 67.54 times, while the portion reserved for qualified institutional investors was underwritten 86.64 times and the portion for high net worth investors 354.11 times.
Burger King India, which currently operates 268 stores in India, has set the price band at ₹59-60 per share. According to analysts, the gray market premium jumped almost 58% or ₹34-35 on the last day of subscription.
The company will get 450 million rupees from the IPO, which it plans to use to pay off its debt and for expansion plans. Existing shareholders, private equity firm Everstone and its co-investors will get Rs 360 crore from the IPO.
According to analysts, the fast food chain is relatively cheap compared to the 10.4x asking price and 6.32x of Jubilant Foodworks and Westlife Development respectively, which are run by McDonalds in certain parts of the country.
“Considering the risks, we advise investors to subscribe to the listing gains for now only. Further improvement in bottom line, debt reduction, and same-store sales growth should be discussed in the next quarters to take a long-term call, “said Nirali Shah, senior research analyst at Samco Securities.
The award for the IPO will be announced on December 9 and the listing will be on December 14.
Earlier on Wednesday, the company raised ₹Rs 364.5 million out of a total of 55 investors. Anchor assignment was made in ₹60 per share.
As of September 30, the company reported income of ₹135.20 crore while for fiscal year 2020 it reported revenues of ₹841.20 crore. The company has yet to report earnings, however it had been able to post a decent gross margin, EBITDA, and positive operating cash flow in pre-covid times.
Investment banks Kotak Mahindra Capital, Edelweiss, CLSA and Jm Financial advised Burger King India on its IPO.
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