Why Burger King India’s share grew by more than 4% in a declining market

Burger King India’s share rose more than 4% today after financial services firm Motilal Oswal launched coverage of the fast food company with a ‘buy’ appeal. He gave a target price of Rs 210, nearly 25% higher than the stock’s close on Friday at Rs 168.60.

The stock has gained 4.51% in the past 2 days. The action hit an intraday high of Rs 175.8, up 4.27% from the previous close of Rs 168.60 on BSE. Burger King stock is trading above 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.

The stock gained 12.16% in one month.

The share total of 2.93 lakh changed hands for a turnover of Rs 5.12 crore on BSE.

The company’s market capitalization rose to Rs 6,673 crore on BSE. The action opened at Rs 168 against the previous close of Rs 168.60.

At 1:48 p.m., the stock was trading 3.35% higher at Rs 174.25 on BSE. Meanwhile, Sensex lost 559 points to 52,583 and Nifty lost 158.75 points to 15,762 in the afternoon session.

“We believe Burger King’s premium multiples are likely to hold up due to its strong growth profile. We initiate the hedge with a buy note and a target price of Rs 210 (28 times EV / EBITDA from September 2025). Based on a three-year perspective. , we come to a target price of 365 rupees per share (30% CAGR), assuming a multiple of 25 times, ”Motilal Oswal said.

The brokerage firm considers all Indian listed quick-service restaurants to be significant beneficiaries of the strengthening tailwinds (led by COVID-19).

“Burger King will benefit from an attractive opportunity to expand both revenue and margin. This will be driven by a big change in its business model through the introduction of a barbell product strategy and BK Café. In addition, aggressive store network expansion and a capped royalty rate will also be key drivers of BPA growth, ”said Motilal Oswal.

Burger King is expected to record sales and EBITDA CAGR of 71% and 286%, respectively, in fiscal years 21-23E and 21-26E. The company’s sales and EBITDA CAGR are expected to be 43% and 110%, respectively, the brokerage said.

On December 14, 2020, the stock made its market debut with a 92.25% premium over the issue price on BSE. Burger King India stock opened at Rs 115.35 against an issue price of Rs 60.

On NSE, the action opened 87.5% more at Rs 112.50 compared to the issue price.

Later, the mid-cap stock closed 130% higher than its issue price. Burger King India’s share finished 130.67% or Rs 78 higher than the issue price on BSE. On NSE, the stock closed at 125% or Rs 75 higher than its issue price of Rs 60.

Since then, the company has experienced a slowdown in business operations due to lockdowns imposed to contain the Covid-19 pandemic.

The effect of the foreclosure is reflected in the stock which has lost 0.88% since the start of this year despite healthy gains at the end of last year.


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