Kotak cuts target price for QSR stocks as consumption slows down

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26 Aug, 2025 12:21

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With the pent-up demand easing and inflation eating into the savings, the QSR (quick service restaurant) industry faces a sudden, sharp moderation in business from November, according to Kotak Institutional Equities.

"The average daily sales (ADS) in Q3FY23 would be flat quarter-on-quarter as against the usual uptick of 5-6 percent (seasonality)," KIE analysts said in a note.

However, Westlife Development which operates McDonalds in west and south India, is an exception to this trend, they said in a recent report.

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Weaker-than-estimated ADS traction, coupled with inflationary pressure in dairy and agri commodities such as wheat flour, could result in sequential decline of margins for QSR companies in the December quarter.

"We cut our FY23-24 EBITDA estimates for Devyani International, Sapphire Foods, Burger King India and Jubilant Foodworks by 2-9 percent. We retain estimates for Westlife Development," the report said.

For KIE analysts, Jubilant Foodworks is the top pick in the pack as the stock has corrected 16 percent in the past three months. "Our estimates model 13 percent/12 percent revenue growth for Domino’s in FY24/25, which looks reasonable in view of 10 percent/9 percent store growth." However, they have cut target price on the stock from Rs 630 to Rs 610 apiece.

The company has also cut price targets for Devyani International (from Rs 195 to Rs 177), Sapphire Foods (from Rs 1,700 to Rs 1,600) and Restaurant Brands Asia (from Rs 135 to Rs 120).

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