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Analysts recommend to selectively buy-the-dip in QSR stocks; here's why

In the past six months, QSR-companies like Devyani International, Jubilant Foodworks, Restaurant Brands Asia, and Sapphire Foods, have tanked up to 26 per cent

Lovisha Darad New Delhi

Web Exclusive Premium

3 min read Last Updated : May 02 2023 | 11:48 AM IST

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Tepid discretionary spends, along with decelerating demand in an inflationary environment will continue to weigh on performance of quick-service-restaurant (QSR) players in the near-term, said analysts. However, they expect demand sentiment to revive in the medium-to-long term as inflation starts to taper.

"As we expect inflation to peak, and trickle down in the later part of this year, we expect QSR companies to reap benefits in the medium-to-long term. Lower raw material prices, better operating leverage, and prudent cost management, can potentially drive profitability for these companies," said Narendra Solanki, Head Fundamental Research – Investment Services at Anand Rathi Shares & Stock Brokers.

Analysts at ICRA, on the other hand, projected top QSR players to add nearly 2,300 stores between FY23-25, with an estimated capex of around Rs 5,800 crore, twice than the levels seen in pre-Covid-19 era, dri