A day after bumper debut, Burger King India shares surge another 20%

On Monday, Valiant Mauritius Partners Offshore purchased 2.5 million equity shares of Burger King India, worth Rs 32.57 crore, via bulk deal on the NSE

Shares of Burger King India (BKIL) rallied up to 20 per cent to Rs 166.05 and hit a new high on the National Stock Exchange (NSE) in the early morning trade on Tuesday after logging stellar debut at the bourses on Monday.

At 11::15 am, BKIL locked in the 20 per cent upper circuit band, as compared to a 0.63-per cent decline in the Nifty50 index. Around 70 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.

On December 14, the stock of the quick-service restaurant (QSR) closed at Rs 135, clocking 125 per cent premium over its issue price of Rs 60 on the BSE. With today's gain, the stock has rallied 167 per cent compared to its issue price.

Valiant Mauritius Partners Offshore purchased 2.5 million equity shares of BKIL, worth Rs 32.57 crore, via bulk deal on the NSE on Monday. The foreign portfolio investor bought shares at price of Rs 130.28 per share, data show.

BKIL, analysts say, is a play on organised QSR space, which is pegged to grow at annualized rate 19 per cent to Rs 82,500 crore over the next five years. Some peg the growth rate to be even higher for organised players as the unorganized sector has been badly hit by the pandemic

The subsidiary of the US-based fast food chain Burger King is one of the fastest growing international QSR chains in India. It got a massive response on its IPO which was oversubscribed by 157 times. BKIL enjoys exclusive National Master Franchisee Rights in India till December 31, 2039, with an obligation to develop and open at least 700 restaurants by December 31, 2026.

The royalty rate is favourable with capping at 5 per cent of sales. Besides, the company has 268 restaurants spread across 17 states/UTs and 57 cities. It has already garnered 5 per cent market share in India's Rs 348 billion QSR market.

"At the current market price, BKIL 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 vs players like Jubiliant Food and Westlife Dev," cautioned analysts at Motilal Oswal Financial Services.