Buy Burger King India; target of Rs 217: Khambatta Securities

Khambatta Securities’ research report on Burger King India

Burger King India Limited’s (BKIL’s) revenues revived further in 4Q FY21 (+20% q-o-q). Monthly average daily sales (ADS) recovery continued to witness strong upward momentum during January to March 2021, clocking 85%, 92% and 111% on a y-o-y basis. Same store sales (SSS) growth regained powerfully with 4Q FY21 SSS declining by only 4.9% (vs -34.8% in 3Q FY21). The company achieved its FY22 target of 65.5% gross margin in advance in 4Q FY21 as successful negotiations for lower rental rates contributed to EBITDA margins.

Outlook

Based on a target Price-to-Sales (P/S) multiple of 6.0x FY23 operating revenue (~20% discount to Westlife), our price target of Rs 217 informs a BUY rating with a 43% upside.