Buy Restaurant Brands Asia; target of Rs 115: Anand Rathi

Anand Rathi's research report on Restaurant Brands Asia

Restaurant Brands Asia (RBA) reported SSSG of 14% in Q2FY27 (vs. 12% in Q1FY27 and 3% in Q2FY26) for Burger King India, driven by higher customer traffic, value offerings, menu innovation, enhanced digital capabilities and disciplined execution. However, its Indonesian business remained muted with Burger King turning restaurant-level EBITDA-positive through cost efficiency, while Popeyes continued to incur loss with strategic options under evaluation. Standalone performance benefited from higher dine-in traffic and improved delivery business, driving a healthy 200bps YoY expansion in EBITDA margin. Expecting the store count of Burger King India to reach ~670 by FY27- end, the management reiterated its annual store addition guidance of 70- 80 outlets in the coming years. We introduce FY29 numbers and raised our FY27/28e estimates, to factor in improving ADS, higher dine-in traffic led by expanding value offerings across geographies.

Outlook

Accordingly, we maintain BUY rating on the stock with a revised 12-mth TP of Rs115, valuing it at 13x Sep-28e EV/EBITDA (vs. 12 FY28e EV/EBITDA previously), on the back of balance sheet strength owing to new promoters and improving business profitability.