I don’t understand, BK sells is more that of westlife or atleast similar. Number of stores are somewhat similar. But still market cap is less than half of westlife. Depreciation for BK is twice that of westlife which is non cash expense and same will reduce once store mature. Operating margins also not that different.
I think this could be similar story like polycab vs havells if BK delivers consistent results once situation improve. Little premium could be justified but this is huge gap in valuation that exist currently
One major reason for lower valuation is the Indonesia business, which was in all probability imposed on RBA (my understanding) by Burger King (the US entity) and it has been underperforming since the acquisition.
Another factor is the Zomato/ Swiggy/ other online aggregators which have been narrated to be faster growing as compared to the QSR brands. I am not so sure about this in the long run (more than 5 years timeframe- my hunch). But for now, it is eating into the valuations of these QSRs.
I am truly hoping that the business turns PAT positive in the next 2 years, coinciding with the target of 700 stores, which will then potentially result in a Hockey stick growth for a few quarters, especially on the bottom line front!
3 Likes
I have just started to acquire the stocks
Avg price atm is 94 with 5% allocation to the portfolio.
Can add more n take it to 10% if the price fall further more.
Find the company to be at reasonable valuation compared to its peers.
