Brokerage firm Prabhudas Lilladher has raised its target price for Restaurant Brands Asia to Rs 112, citing strong domestic performance in India. While the company's India operations are growing, persistent losses in the Indonesian segment remain a key risk for investors to monitor.
Prabhudas Lilladher has increased its target price for Restaurant Brands Asia to Rs 112 from the previous Rs 101. This update comes as the company continues to see solid demand in its core Indian market, despite facing ongoing headwinds in its international business operations.
Domestic Performance Gains
The company’s performance in India has been a significant support for its overall business. Recent data shows a 14% growth in same-store sales, which measures revenue from stores that have been open for over a year. The average daily sales per store have reached Rs 131,000, signaling a steady increase in consumer demand. Beyond sales, the company has focused on operational efficiency by reducing corporate overhead costs by approximately 3.8% sequentially. This disciplined approach to costs has contributed to positive adjusted profit after tax, providing a buffer as the company looks to scale its operations further.
Challenges in Indonesia
While the India business is moving in a positive direction, the Indonesian segment remains a point of concern. The Indonesian division reported an EBITDA loss of Rs 119 million, with the Popeyes brand being a primary driver of these losses. This international drag has historically impacted the company’s consolidated profitability, masking the improvements seen in the Indian market. The company has shifted its strategy from potentially divesting the business to implementing a store-level revamp. Investors are closely watching to see if this turnaround effort can stop the cash drain and eventually turn the Indonesian segment profitable.
Outlook and Investor Monitorables
The brokerage anticipates that upcoming initiatives, such as youth-focused engagement programs planned for December, could help drive further traffic in the Indian market. Projections indicate that the company could see an earnings per share of Rs 1.6 by the fiscal year 2028, provided that operating leverage—where the business earns more profit as it scales—continues to improve. However, the path to profitability for the consolidated entity remains tied to the international turnaround.
For investors, the primary monitorable is the contrast between the profitable India growth story and the loss-making international operations. The effectiveness of the management’s revamp plan in Indonesia will determine if the consolidated margins can expand in the coming quarters. Any delay or failure in executing this turnaround could keep pressure on the company's overall financial health.