Share of Burger King India hit upper circuit of 10% in early trade today, clocking 265% gains to issue price since December 14. Burger King India stock rose to Rs 219.15 against previous close of Rs 199.25, recording a gain of 10% on BSE. On NSE too, the share was stuck in upper circuit of 10% in early trade. The share was trading at Rs 213.80 against previous close of Rs 194.40.
The stock closed 20% higher at Rs 199.25 on Wednesday after remaining stuck in upper circuit throughout the session.
About 16.43 lakh shares changed hands on BSE in early trade. Market cap of the share rose to Rs 8,363 crore.
There were only buyers and no sellers in Burger King stock in trade today.
On the listing day, the share gained 92.25% over issue price of Rs 60 on BSE. Share of Burger King India opened at Rs 115.35 against issue price of Rs 60.
On NSE, the share listed 87.5% higher at Rs 112.50 against the issue price.
Here's a look at what analysts said about the stock's record run, the factors behind the rally and outlook for the same.
Hemang Jani, Head - Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services said, "This frenzy was well supported by market which is touching new highs every day. Further, retail investors appetite is high for small/ midcap stocks and given lower float in the stock, impact cost is high. As the economy is opening up and fresh liquidity is rushing into the market, growth-oriented sectors have started to perform better.
Burger King is present in the niche sector QSR, and thus saw strong demand similar to Jubilant Foodworks IPO. The QSR space has gained importance in recent years driven by millennials, nuclear families, influence of western culture, and working population. Burger King is a popular QSR brand at initial stage of business, so there are high expectations of growth and market share gains through expansion. Market cap of Burger India has now zoomed to Rs 8,363 crore, moving past Westlife Development's market valuation of Rs 6,800 crore."
Keshav Lahoti, Associate Equity Analyst, Angel Broking said, "Currently, Jubilant Foodworks, Westlife Development and Burger King are trading at 9.1x, 5.0x and 6.6x respectively on FY20 EV/Sales. We believe Burger King will trade at premium compared to Westlife Development because of its better financial position and growth prospects.
Although Burger King will never get such premium valuation like Jubilant Foodworks as Jubilant is a profit making company with the highest market share in the QSR segment. Still, there is a scope for valuation gap between Burger King and Jubilant Foodworks to narrow down. We are cautiously positive on the stock, 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."
Abhijeet Ramachandran, Independent Analyst/ Co-Founder and Trainer at Tips2Trade said, "Despite a phenomenal listing and subsequent upper circuit filters being seen every day, we maintain that Burger King is overvalued. Investors should keep booking profits at current levels and wait to re-enter at lower levels near 110 only."