Accumulate Restaurant Brands Asia; target of Rs 89: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Restaurant Brands Asia with a target price of Rs 89 in its research report dated May 19, 2025.

Broker Research

May 20, 2025 / 14:55 IST

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Prabhudas Lilladher's research report on Restaurant Brands Asia

Restaurant Brands Asia (RBA) posted 5.1% SSG in Q4 as demand improved led by focus on value proposition and healthy growth in store traffic with ADS of 108k and Adj loss at Rs254mn vs est of Rs270. Indonesia business reported 9.7% decline in sales (BK-Indonesia SSG came at 2%), however green shoots in demand recovery are visible with stabilizing geopolitical scenario and closure of non-performing stores. RBA’s India strategy is centered around 1) Value focus with combos (2 veg Burgers at Rs79, Chicken at Rs99) and value meals at Rs99 to drive in store traffic 2) digital driven ordering 3) cost reduction in delivery business and 4) control over overheads. Indonesia is focusing on 1) zero store openings 2) lowering of overheads 3) menu innovations in chicken and driving efficiencies in procurement by leveraging Indian operations. We estimate India business to turn PBT from operations positive by FY28. Near term outlook looks cautiously optimistic as demand revival and cost control hold key to improving margins.

Outlook

BK raised Rs5bn which has improved cash position to invest in expansion plans. As of now we have not assumed incremental investment in Indonesia business. We have increased our SOTP based target price from Rs74 to Rs89. Retain Accumulate.

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