Macquarie bullish on QSR sector; initiates coverage on 2 stocks
Macquarie has initiated coverage on two key players in the quick service restaurant (QSR) sector, Devyani International and Sapphire Foods, with «Outperform» ratings expressing a positive outlook on the sector in India.
The brokerage firm has set a target price of Rs 230 for Devyani International, a Yum! Brands franchisee in India, and Rs 390 for Sapphire Foods.
Macquarie's optimism stems from channel checks indicating a recovery in growth momentum across the restaurant industry, with a noticeable acceleration observed in December. This suggests a strengthening demand environment for QSR chains.
The brokerage firm's proprietary restaurant brand index places both KFC (Kentucky Fried Chicken) and McDonald's at the top, further bolstering their conviction in Devyani, which operates KFC and Pizza Hut outlets in India.
“Our experience with Yum China makes us constructive on the ramp for growth in store additions for Yum India franchisees (Devyani, Sapphire), especially for KFC. Recent format additions in China like K Coffee, Pizza Hut Wow (value-focused smaller format) also show how these brands have the ability to drive stronger growth over the medium term,” Macquarie said in its report.
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