Buy Stock Of Burger King's Largest Franchisee As It Shows Significant Potential

Leading stock-broking firm Prabhudas Lilladher suggests the investors to accumulate stock of Restaurant Brands Asia, the largest player that runs the Burger King franchisee, with a target price of Rs 132. The company has managed to turn around and improve to break even. Seeing this the stock-broking firm has given a 'buy' rating.

Optimistic Outlook

Restaurant Brand Asia's domestic business parameters are improving in terms of ADS & profitability while business restructuring in Indonesia should provide breakeven by FY24. The company reported EBITDA margin slippage of 136bps QoQ due to an increase in operating expenses and demand slowdown which resulted in ADS dropping to Rs108k. Indian unit has seen the launch of a Rs 99 value meal, as per the brokerage firm's research report.

According to the management commentary, Indonesia operations continue to have lower ADS vs pre-COVID; new strategy is expected to improve ADS with relaunch/innovation in the Whopper range, increased focus on chicken offering, the launch of desserts and focus on FSDT format & store rationalisation.

Valuation & Rating

Prabhudas Lilladher said, "We believe RBA India operations are on track and should report low to mid-single-digit pre-IND AS EBIDTA in FY24 with meager profits in FY26. We believe Indonesia's business will take time to turn around despite corrective measures implemented in FY23 given initial losses in Popeyes (25 stores in FY24). We value the company at Rs 132 (Rs 121 earlier) on SOTP basis. Maintain ACCUMULATE."

Stock Movement

The last closing price of Restaurant Brands Asia stock is Rs 118.10 per share, which has fallen sharply by 3.51% over the previous day's closing. In the last one year, the share price has surged by 25.97% but over the last three years, it has plunged by 26.85%.

Disclaimer

The stock has been picked up from the brokerage reports of Prabhudas Lilladher. Greynium Information Technologies, the author or the brokerage firm is not liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.