MUMBAI: Burger King India witnessed robust response as it received 9.38 times bids for its initial public offer (IPO) by the end of Day 2. The issue has received bids for 69,86,61,250shares, which was 9.38 times the issue size of Rs 7,44,91,524 shares.

The IPO was subscribed 3.13 times on the first day of its bidding process. The portion reserved for retail investors was subscribed more than 15.5 times on Day 1, with quotas for qualified institutional buyers (QIBs) and HNIs subscribing 16 per cent and 70 per cent, respectively. QIBs and HNIs generally put their bids on the last day of offer.

The IPO consists of a fresh issue of Rs 450 crore and an offer for sale (OFS) of up to 6 crore shares, aggregating Rs 360 crore. It is being sold in the price band of Rs 59-60 apiece. Retail investors willing to invest can buy a lot of 250 shares and a maximum of 3,250 shares.

The company had on Tuesday raised Rs 364.5 crore from anchor investors.

At an upper price band of Rs 60, the IPO is valued at a price-to-sales ratio of 2.7 times based on FY20 sales, compared with peers Jubilant FoodWorks 8.4 times and Westlife Developmentss 4.4 times. On a per store basis, market cap to total stores stands at Rs 8.8 crore, compared with Jubilant FoodWorks Rs 26.2 crore and Westlifes Rs 23.80 crore.

Considering its strong brand positioning, robust store expansion plans and the bright growth prospects of the QSR industry in India, we expect its financials to improve going ahead. Thus, we would recommend investors to subscribe for listing gains to the IPO, Motilal Oswal Securities said.

Keshav Lahoti of Angel Broking noted that Burger King has opened 268 stores in the last six years of operations in India. Looking at the current run rate, he said, the company management will be able to achieve the target of 700 stores by Dec’26.

As the store count will increase, operating leverage will kick in and the company will be able to report profit. We believe there is ample scope available for the company to increase its business in India, Lahoti said.

At the upper end of the price band, the stock will trade at an EV/sales of 2.2 times on FY20 basis, which Lahoti said is quite reasonable.

We believe that there is a good possibility of listing gains given lower valuations as compared to other listed peers. We are also positive on the long term growth prospects of the Industry and the company, and hence recommend to “Subscribe” to the issue for long term as well as for listing gains, he said.

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