Motilal Oswal's research report on Restaurant Brands Asia
Restaurant Brands Asia (RBA) posted a 12% YoY India revenue growth (inline), led by a 13% YoY increase in store additions. The same-store sales rose 5%, led by dine-in traffic growth and value offerings. The company remained an outperformer among the dine-in players. India GM was up 10bp YoY/ flat QoQ to 67.8% (est. 68.2). The RM inflation has been offset through supply chain efficiencies. We model ~68.0-68.5% GM for FY26 and FY27. India ROM (pre-Ind-AS) increased 51% YoY to INR516m. Margins were up 270bp YoY to 10.5%. EBITDA margins (Pre-Ind-AS) expanded 300bp YoY to 5.4%. EBITDA was up by 150% to INR266mn. RBA plans to continue enhancing its delivery profitability by optimizing its pricing, improvising its menu, and cutting fixed costs such as utilities.
Outlook
We reiterate our BUY rating with a TP of INR135. We value the India business at 30x FY27E EV/EBITDA (pre-INDAS) and Indonesia EV at INR5b (based on ~0.75x EV/sales FY27E).
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