Restaurant Brands Asia Q4 Results Review: Dolat Capital Downgrades Rating To 'Sell' On Recent Stock Run-Up

Restaurant Brand Asia’s (consolidated) revenue grew by 5.9% YoY to Rs 6.3 billion in Q4 FY25. Gross margin expanded by 100 bps to 65.3% on a YoY basis. A 100/70 bps decline in raw material/ employee cost was fully offset by 180bps increase in other expenses. Consequently, Ebitda margin remained flat on YoY basis at 11.6% in Q4 FY25.Ebitda grew by 5.7% YoY to Rs 732 million in Q4 FY25. Adjusted net loss stood at Rs 604 million in Q4 FY25 compared to net loss of Rs 921 million in Q4 FY24.

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Dolat Capital Report

Restaurant Brands Asia Ltd.’s Q4 FY25 revenue was in line; however, Ebitda was ahead of estimate. India business reported 11.5% revenue growth supported by robust same-store sales growth growth of 5.1% on account of improved dine-in traffic growth. Furthermore, average daily sales improved from 105,000 in Q4 FY24 to 108,000 in Q4 FY25. Additionally, Pre IND-AS store Ebitda expanded by 270 bps YoY in India to 10.5%.

As on FY25, Restaurant Brands Asia reached 513 outlets in India. Going ahead, the company aims to add 60-80 new outlets every year, to take total outlets to ~800 by FY29E. In addition, the management aspires to increase gross margin by 0.5 to 0.7% annually over the next four years.

We have broadly maintained our FY26/27E Ebitda estimates as we have reduced our revenue estimates but increased Ebitda margins in line with Q4 performance.

We arrive at a target price of Rs 80 (Rs 79 earlier) valuing the stock at 14x FY27E EV/Ebitda. However, due to the recent run-up in stock price, we downgrade our rating to ‘Sell’.

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