BARBEQUE posted a weak performance in 4QFY23, with revenue growth of 12% and an EBITDA decline of 10% YoY. Lower SSSG pulled down EBITDA margin by 350bp despite 17% store adds. Revenue from mature stores stood at INR66m (5-6% below expectation). The management remains hawkish on demand trends in 1HFY24 and has subsequently curbed store adds guidance to 20 in FY24 v/s 31 net adds in FY23. Valuations are fair at 9.2x FY25E and 12x FY25E EV/EBITDA (pre-IndAS). We reiterate our Neutral rating on the stock with a TP of INR700, based on 14x FY25E EV/EBITDA (pre-Ind-AS).
OutlookWe reiterate our Neutral rating on fair valuations, inherently lower return ratios as compared to QSRs, and potential vulnerability of its higher ticket size delivery business in an inflationary environment. We arrive at a TP of INR700 based on 14x FY25E EV/EBITDA (pre-Ind-AS).
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