Daybreak - Burger King India finally works but its stock still refuses to celebrate

Episode Date: July 28, 2026

Burger King India is one of the country's better-run quick-service chains. Gross margins are at record highs, restaurant-level profits have doubled, and the burger chain has posted five straight quarters of same-store-sales growth. So why does its stock sit close to where it listed six years ago? Part of the answer is Indonesia, where an old acquisition keeps bleeding cash. The rest is the new owner. A pharma family has taken control of Restaurant Brands Asia, pouring in far more money than its expansion needs, much of it debt backed by pledged shares. Tune in.*This episode is based on a story by Anirudh Somani who is also an investor in the companyDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Earlier this month, Burger King India was acquired, and the person who just bought the business comes from the world of, well, pharmaceuticals. Ayush Agarwal is 37 years old and his family is behind Ajanta Farmer, a mid-sized drug company worth nearly 43,000 crore rupees. Not the buyer that most people were expecting for restaurant brands Asia, which is the listed company that runs Burger King in India and Indonesia. But Agarwal is actually no stranger to food. He has spent more than a decade building his own brands.

You've probably heard of some of them already. Chinese Walk, Big Bowl, the Momo Company, they are all a part of his quick-service restaurant company called Lennox's Food Work. And earlier in July, Lennoxious completed its takeover of restaurant brands Asia from the previous owner Everstone Capital. At first glance, it looks like a solid bet. Over the last five years, Burger King India has become a genuinely good business. Its restaurant level profits have more than doubled and gross margins are at record highs.

The chain has posted five straight quarters of same store sales growth, even while shoppers, cutback and rivals have been struggling to fill tables. But here is what's puzzling. The business is good, but the stock does not believe it. You see, restaurant brands Asia trades close to its IPO price of 60 rupees. But back in late 2020, that IPO was subscribed 156 times and the stock nearly doubled on day one. All that faith has drained away now, even as the company underneath it got stronger. So what is holding it down? Two things. The first is Indonesia,

and old acquisition there keeps bleeding money year after year and the second is the new owner and how he paid. Lenoxys did more than buy a stake. It poured nearly 1,500 crore rupees into the company, and much of that is debt, backed by Agarwal's pledged shares in Ajanta Farma itself. And this second problem points to the real question hanging over this deal. A Burger King operator does not need that kind of money. Its own expansion plans cost a fraction of it.

So why is it here? Welcome to Daybreak, a business podcast from the Ken. I'm a host Nick Da Sharma and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargiz and I will come to you with one business story that's worth understanding and worth your time. Today is Tuesday, the 28th of July. Let's start with the good stuff first, because to be fair, there is a lot of it. Burger King India is one of the country's better run quick service restaurants.

In the four years leading up to the financial year 2026, gross margins climbed from under 66% to nearly 70% and that is ahead of what management itself targeted. Restro-level EBita margins double to nearly 12%. The store count also doubled to over 580. Same store sales growth hit 6.3% in the March quarter and that is the chain's best run in almost three years. If you compare that with us, Others like McDonald's or KFC, their recovery seems badger.

A lot of this traces back to timing. Burger King entered India in 2014, and this was around the time that McDonald's fell into one of the longest franchisey disputes in global restaurant history. As that litigation dragged on, McDonald's expansion in the north and east were stalled. A gap had opened up, and Burger King walked straight through it, and it held the sole right to develop and run its outlets so that it could scale cleanly. And today, it is India's second largest burger chain by store count behind only McDonald's. But not every number is moving up. Average daily sales per store have stayed flat at about 1.16 lakh rupees for three years now.

Management points to the age of the stores. Nearly a third of them are less than three years old and newer cafe formats start with lower volumes. CEO Raji Varman even made this point to investors. There is also a bigger shift underway. Aniket Nikum, who is a former Subway India operator who now runs ABN Capital, says that Zumato and Swiggy have fragmented the market. Scale, location and branding used to be real barriers. Now, anybody with a kitchen and a delivery listing can chase the same customer.

Another investor also pushed back, saying that every player has already adjusted. For Burger King, delivery has settled into a steady 40 to 44% of its sales over the last four quarters. But if the India business overall works, why does the stock say otherwise? More on this in the next segment. The paying point is Indonesia. In 2022, the company paid over 1,000. crore rupees for an 88% stake in Burger King, Indonesia. And the logic sounded strong. Investors were told that it was the world's fourth most populous country with over 270 million people. Also,

higher per capita income and cheaper rentals. So for Burger King, India was the first engine and Indonesia was meant to be the next. But so far, that bet has not really worked out. In the financial year 2006, Indonesia made up less than one-fifth of the company's consolidated revenue of over 2820 crore rupees. Three years ago, it was nearly a third. Its store count fell from 186 to 162, and its restaurant EBTA has stayed negative for two straight years. In the financial year, 26, the Indonesia losses ate up 43% of the cash the healthier Indian

business had generated, which is why Nikum calls the whole thing a mistake. He says an Indian listed company has no natural read on Indonesian consumers. But back in May 2025, the management was still saying that it was weighing all options. That call still hasn't come. Now, to the new owner and the money. Everstone was always going to exit. It cut its stake from over 85% before the IPO to about 11% to about 11% and the money. by late 2025.

Nikom noted that the asset sat on a block for a long time and was not really hotly contested. And then Lennoxes eventually stepped in. Now, here is what unsettles long-time shareholders. Beyond the 460 crore rupees that was paid to Eversone, the full deal with shares and warrants works out to over 2,680 crore rupees. And a big chunk of it,

actually rests on the Agarwal family's Ajanta Farma holdings. They have pledged more than 16 million shares worth nearly 5,400 crore rupees. It is a leveraged bet with Ajanta's stock sitting underneath as collateral. Then there is the size of the raise. The company gets up to 1500 crore rupees, but opening one Burger King costs about 2.6 crores. Management plans for 60 to 80 new stores a year. Based on this, even at the top end, that is a little over 200 crore rupees a year only. Which is why 1500 crore rupees looks like a lot of spare cash. Manish Gupta of Solidarity Investment Managers warned his clients that the extra capital brings dilution and uncertainty about where it goes. His firm has trimmed its holdings since the ownership change. Investors

are also watching the new partnership at the top. Rajiv Varmand, the chief executive of the restaurant brands Asia, has spent three decades running restaurants across US, Canada and Europe. But he has never worked under an Indian promoter in this business before. For years, the question was whether Indonesia would ever justify the money that it drew. There is still no answer to this. But the terms of the debate have shifted. The job now falls to Agarwai.

To prove Burger King's next set of money decisions will be as good as its wobble. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleagues Niktha Sharma and edited by Rajiv Sien.