Restaurant Brands Asia Q2 Results Review

Restaurant Brands Asia Ltd.’s rarnings continued to improve in Q2 FY24 as consolidated revenue/Ebitda grew 19%/2.2 times YoY. India Ebitda (pre India Accounting Standard 116) jumped 2.1 times YoY/2.4 times QoQ, led by 23% revenue growth (3.5% same-store sales growth), gross margin improvement (led by BK Cafe) and controlled costs and operating leverage.

Indonesia continued to post an operating loss, but it remains on track to break-even in FY24 on a run rate basis.

While Restaurant Brands Asia’s management has marginally reduced its India SSSG guidance from 10% to 6% for FY24, we believe it is still higher than industry growth rate.

Considering high SSSG guidance, gross margin improvement, scale benefits and improved store economics, we maintain our FY24/FY25 Ebitda estimates (pre India AS 116) of Rs 952 million/Rs 1.6 billion.

Along with a recovery in Indonesia, consolidated revenue/Ebitda should grow 28%/two times over FY23-25E. We maintain our ‘Buy’ rating on the stock.

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