Target: ₹100
CMP: ₹119.25
Restaurant Brands Asia’s (RBA) Q1-FY24 print was mixed; standalone revenue/EBITDA grew by 25.3/ 45.9 per cent while PAT declined 2.6 per cent YoY. Despite stretched consumer spends, with 396 stores, RBA clocked Same Store Sales Growth(SSSG) of 3.6 per cent (Westlife Development at 7 per cent), while ADS (average daily sales) stood flat at ₹1.2 lakh (up 11 per centon QoQ).
Dine-in grew by 10 per cent contributing to 60 per cent of sales. We reckon sharp focus on building traffic using VFM layer through menu innovation (₹99 meal) yielding good results.
RBA said building brand love with Gen-Z and Millennials remains key priority. That said, BK Café now add ₹8000 incremental ADS to India. Indonesia (BK+Popeyes) revenues grew 23.9 per cent to ₹190 crore with 5.5 per cent SSSG and ADS at IDR19.4mn (+10.2 per cent).
Management aims to strengthen Indonesia operation establishing relevant chicken menu and leadership in Burgers, yet plans to open 25 Popeyes stores. Gross margin came in at 66.5 per cent (+10bp), yet higher employee/other expenses at +21.2/+22.2 per cent reflected in post-INDAS EBITDA margins at 11.5 per cent (+162bp).
Management targets to deliver about 10 per cent SSSG with about 67 per cent gross margin in FY24. We tweak earnings and retain Sell with a revised DCF-based TP ₹100.