Accumulate Restaurant Brands Asia; target of Rs 145: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Restaurant Brands Asia

We change our FY23/FY24/FY25 EPS by 1%/-32%/-5% given 1) higher corporate overheads (ESOP provision) and 2) lower than expected margin expansion. Restaurant Brands Asia (RBA) reported in-line margins despite increase in operating expenses due to sustained traction in older stores and cost control, despite ADS dropping to Rs120k on softer demand. We believe Jan’23 price hike will help neutralize the impact of increased overheads on store expansion. BK is looking to promote margin accretive chicken offerings in South market & compete vs incumbents. Indonesia operations has lower ADS vs pre COVID; new strategy is expected to improve ADS with 1) relaunch/innovation in Whopper range 2) increased focus on chicken offering 3) focus on FSDT format and store rationalization. We believe RBA India operations are on track and should report mid-single digit pre IND AS EBIDTA with small profit in FY24 and full turnaround in FY25 given sustained customer traction and likely gains from BK Café in FY24.

Outlook

We believe Indonesia business will take time to turnaround given delay in post COVID recovery, business restructuring and initial losses in Popeyes (5/30 stores in FY23/FY24). We value the company at Rs 145 (Rs156 earlier) on SOTP basis. Maintain ACCUMULATE

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Restaurant Brands Asia - 09 -02 - 2023 - prabhu