When was the last time you saw a loss making company coming up with an IPO?
The case in point being 'Burger King', a consistently loss making company whose IPO opens today.
Let us find out the criterias a company needs to fulfill to bring up an IPO.
#burgerkingipo #BurgerKing
The case in point being 'Burger King', a consistently loss making company whose IPO opens today.
Let us find out the criterias a company needs to fulfill to bring up an IPO.
#burgerkingipo #BurgerKing
A company must have an average operating consolidated profit of atleast 15 crores during the preceding 3 years with operating profits in each of these 3 years.
This is as per section 6(1) of SEBI (ICDR) Regulations, 2018. 
However, companies clocking losses or those who do not fulfill the eligibility requirements, can still bring an IPO of they allot alteast 75% shares to QIB.
The rationale behind this is safety of retail investors. This is why we are seeing such low retail quota in case of Burger King IPO.
Burger king's revenue grew from ₹234 crores to ₹846 crores from 2017 to 2020. That's a great growth but the expense too multiplied in the same period. That's why the loss!
Burger king's royalty expense is 4-5% compared to Jubiliant Foodwork's 3-4%.
Also, its raw material cost is 36% of sales and Jubiliant's raw material cost is only 25% of sales.
Also, its raw material cost is 36% of sales and Jubiliant's raw material cost is only 25% of sales.
It seems it will take time for Burger King to turn the corner.
Retail investors looking at GMP before subscribing must then strictly define their investment time frame.
Retail investors looking at GMP before subscribing must then strictly define their investment time frame.
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