Indian quick-service restaurant stocks could see further upside as signs of a recovery in consumer demand strengthen, according to Macquarie. The brokerage said channel checks point to second-quarter same-store sales growth (SSSG) improving from the first quarter, supporting a more constructive outlook for the sector.
Devyani International is Macquarie's preferred pick, with a target price of Rs 190, up from Rs 130. Based on its August 24 closing price of Rs 149, the revised target implies 27.5% upside. The brokerage maintains its Outperform rating.
Macquarie also retained an Outperform rating on Sapphire Foods, raising its target price to Rs 300 from Rs 200. At Rs 250, the stock has 20% upside to the revised target.
Westlife Foodworld remains an Outperform, with the target price increased to Rs 730 from Rs 520. At Rs 583, the new target implies roughly 25% upside.
Macquarie upgraded Jubilant FoodWorks to Neutral from Underperform and raised its target price to Rs 520 from Rs 375. However, with the stock at Rs 508, the revised target offers only about 2.4% upside, making it the least attractive of the four on the brokerage's target-price framework.
The brokerage's preference within the sector is Devyani/Sapphire > Westlife > Jubilant.
It sees strength in the KFC and McDonald's formats supporting Devyani and Sapphire, while a potential turnaround in the Pizza Hut business could provide an additional earnings tailwind for Devyani following the merger of Yum franchisees.
Macquarie expects demand recovery over the past two quarters to translate into better earnings, with dine-in-led growth and operating leverage potentially driving 20%+ FY26-29E EBITDA CAGR across its QSR coverage. Macquarie also highlighted continued EPS volatility at Jubilant due to its Domino's Turkey exposure, even as India's like-for-like recovery and Popeyes provide some support.
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