BARBEQUE’s dine-in focused business (as opposed to QSRs) meant that higher-than-expected Omicron impact for the sector adversely affected the company more. Sales miss of 6% had an adverse impact on EBITDA, which came in 15% lower than our expectation. Unlike QSRs, BARBEQUE’s delivery business is not just of higher ticket size but also has a shorter history making this business segment (18-20% of sales) more vulnerable in an inflationary environment. Its higher dine-in based nature also begets inherently lower RoCEs compared to QSR peers. Its valuation is fair at ~19x FY24E Pre Ind-AS EV/EBITDA. Maintain Neutral.
OutlookWe maintain our Neutral rating on fair valuations, inherently lower return ratios compared to QSRs, and potential vulnerability of its higher ticket size delivery business in an inflationary environment.
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