Prabhudas Lilladher's research report on Restaurant Brands Asia
Restaurant Brands Asia (RBA) had posted mixed results with miss on revenues but 96 bps beat on margins led by stable RM costs & benefits of cost optimization techniques. Sales were tepid given muted demand, although focus on innovations/value meal continue to drive traffic. Indonesia business saw another muted quarter (6% sales growth) due to negative sentiments against US brands and lower number of BK stores even as traction in Popeye’s & value offerings sustained momentum. Near term, profits will be impacted by higher opex/depreciation/interest on 51 stores in 2HFY24. LT outook in India looks positive with 1) steady improvement in store traffic 2) sustained benefits from value meal and innovations and 3) strong growth in smaller towns. Indonesia is expected to show recovery post IHFY25 led by 1) Improving sentiments with time 2) new range of chicken offerings 3) desserts scalability and 4) sustained traction with higher ADS in Popeyes.
Outlook
Given strong SSG outlook for long term, we expect India business to report FY26 PBT from operations loss at Rs26mn. We value the company at Rs 134 (Rs137 earlier) on SOTP basis. Retain Accumulate.
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