Neutral Barbeque Nation Hospitality; target of Rs 600: Motilal Oswal

Motilal Oswal's research report on Barbeque Nation Hospitality

Barbeque Nation Hospitality (BARBEQUE) revenue grew 1.3% YoY, impacted by higher vegetarian days in 2Q and sluggish demand. SSSG remained weak and reported -2.5% YoY in 2QFY25 vs. -10.7% in 2QFY24 and -7.4% in 1QFY25. The company has seen MoM improvement in the SSSG trend. Dine-in revenue remained flat at INR2,598m while delivery was up 4% to INR459m. GM trajectory remained strong, expanding 210bp YoY to 68.1%. ROM was up 120bp YoY to 12.4%, cost control initiatives helped in margin expansion, which offset the negative OpLev pressure on margin. EBITDA margin expanded over 20bp YoY to 14.9% (est. 15%). The company posted a PBT loss of INR 100m vs. a loss of INR151m in YoY.

Outlook

However, we are watchful of BARBEQUE’s operating margin profile in FY25 amidst the challenging demand environment. We reiterate our Neutral rating on the stock with a TP of INR600, based on 17x Sep’26E Pre Ind-AS EV/EBITDA.

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