Sharekhan's research report on Restaurant Brands Asia (Burger King India)
Restaurant Brand Asia (RBA) posted resilient performance in Q4FY2023 with consolidated revenue growing by 29% y-o-y to Rs. 514 crore; gross margin improving by 54 bps y-o-y to 64.1% and EBIDTA margin improving by 27 bps y-o-y to 5.3%. Management has guided for 10% SSSG for FY2024 and 8% SSSG for FY2025; it targets 67% gross margin in FY2024 for India business. Around 80% of strategies in the Indonesia business are in place; Popeyes is gaining strong response with 2.0-2.3x volume growth over the burger business. Indonesia business is expected to be cash break-even in FY2024.
Outlook
Despite strong run-up post results, the stock trades 11% lower compared to its 52-week high, valuing at 23x/16x its FY2024E/FY2025E EV/EBIDTA. With a favourable risk-reward, we maintain Buy on the stock with a revised price target (PT) of Rs. 150.
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