Sharekhan has given Buy recommendation for Restaurant Brands Asia with a target price of Rs. 175 in its research report issued on Sep 05, 2022

Sharekhan’s research report on Restaurant Brands Asia

Long-term franchisee agreement with ‘Burger King’ (expiring in Dec 2039), strong store expansion plans (700 stores by FY2026) and a differentiated menu with a focus on value and premiumisation provides it an edge over peers to scale up faster in the coming years. Launch of BK Café (to add ~6-7% to India ADS) and expansion in Indonesia (that will enhance revenues by 25-30%) will incrementally add-on to revenues and profitability in the medium to long term. Consolidated revenues are expected to clock a CAGR of 43.3% during FY2021-24E and EBIDTA margins will improve to ~15% in FY2024 from 2.5% in FY2021. This along with negative working capital will help boost return profile and cash flows.

Outlook

We initiate coverage on Restaurant Brands Asia (RBA) Ltd (formerly known as Burger King India) with a Buy rating and a PT of Rs. 175. RBA an emerging QSR play with strong store expansion plans and a well-accepted portfolio is trading at an attractive valuation of 27.1x/14.1x its FY2023E/24E EV/EBITDA.

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