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.
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.