Accumulate Restaurant Brands Asia; target of Rs 112: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • RBA's India business is driving growth, with a strong value proposition and healthy in-store traffic, resulting in 14% same-store sales growth (SSG) in Q2.
  • The company's focus on value-led combos, menu innovation, and digital initiatives is expected to continue driving traffic growth and supply chain efficiencies.
  • Indonesia business remains a drag, but the company is shifting its strategy to revamp existing stores, with a focus on restoring sales and margins to previous levels.
  • RBA has increased its annual store addition guidance to 80-100 stores, driven by a cluster-led strategy.

Thesis Validation Checklist

  • Investors should watch for continued strong SSG growth in India, driven by the company's value-led strategy and healthy in-store traffic.
  • Improvement in Indonesia's daily average sales per restaurant, aiming for 25 million IDR from the current 19-20 million IDR, and a return to 15% restaurant-level EBITDA margins.
  • The company's ability to maintain operating leverage, tighter cost controls, and higher other income, which is expected to support EPS growth.
  • The success of RBA's new family and kids programs, which are expected to drive incremental volumes and support the company's growth strategy.