The quick service restaurant (QSR) market is hot, not just globally, but in India as well. The full-service domestic brokerage firm Motilal Oswal has reiterated its ‘Buy’ call on Restaurant Brands Asia (RBA), projecting an upside of 65% with a target price of Rs 135, compared to the current market price of Rs 82.
Motilal Oswal sees RBA best performer in dine-in
The broker said the company is the best performer in dine-in. For better understanding, the company runs QSRs such as Tim Hortons, Burger King, Popeye’s, etc. RBA has exclusive rights to develop, establish, operate, and franchise these branded restaurants across India.
Motilal Oswal finds India story “very promising” with a focus on raising store unit economics in India and sustaining store rollouts. The company has outperformed other dine-in peers on all fronts in FY25, said the brokerage. In FY25, the company reported a growth of 9% in its dine-in traffic YoY, backed by value offerings. Over FY24, RBA clocked a 3x growth in dine-in app transactions.
Motilal Oswal on RBA: Cost-effective measures drive margins
Apart from that, the company’s India business’s margins have increased compared to its Indonesia business. This was achieved on the back of the cost-effective measures it took. RBA’s India restaurant operating margin (ROM) increased 51% YoY to Rs 51.6 crore. Margins were up 270 basis points YoY to 10.5%. EBITDA margins expanded 300 bps YoY to 5.4%. EBITDA was up by 150% to Rs 26.6 crore. RBA has planned to continue enhancing its delivery profitability by optimising its pricing, improving its menu, and cutting fixed costs such as utilities.
Plus, the company offset its raw material inflation through supply chain efficiencies. The brokerage house modelled 68% gross margin for FY26 and 68.5% for FY27.
Motilal Oswal on RBA: Steps have been taken to improve Indonesia’s business
The company is taking several initiatives to control costs in Indonesia to lower its losses, as the company’s Indonesia business margins have declined. QSR’s Indonesia revenue declined 10% YoY, which was due to geopolitical crises and store closures (7 Burger King stores were closed in FY25). Indonesia ROM posted a loss of Rs 2.7 crore in the fourth quarter of FY25, compared to a net profit of Rs 1.6 crore in Q4 FY24.
RBA Q4 earnings
The company’s consolidated net loss narrowed to Rs 60.44 crore YoY in Q4 FY25 from a net loss of Rs 92.09 crore reported in the same quarter of FY24. Its revenue from operations rose 5.92% YoY to Rs 632.55 crore in the last quarter of the financial year 2024-25, compared with Rs 597.14 crore recorded in Q4FY24.