Restaurant Brands Asia hits 52-week high post Rs 1,494 cr block deal
On September 15, Restaurant Brands Asia experienced a remarkable surge in its share price, marking a significant milestone by reaching a 52-week high of Rs 135.40 during the early trading hours. This sudden and substantial increase in the company’s stock value captured the attention of market participants and investors.
The catalyst behind this notable boost in share price was a substantial block deal worth Rs 1,494 crore that took place on the stock exchanges. In this transaction, approximately 12.54 crore shares, equivalent to 25.4 percent of the company’s equity, changed hands. However, at the time of reporting, the specific details of the parties involved in this transaction had not been immediately disclosed or identified.
Block deals of this magnitude can have a considerable impact on a company’s stock price, and they often signify significant changes in ownership or investor sentiment. This surge in Restaurant Brands Asia’s share price suggests that the market responded positively to this transaction, indicating increased investor interest and confidence in the company’s future prospects.
The block deal involved the exchange of approximately 12.54 crore shares, which accounts for 25.4 percent of the company’s equity. However, at the time of the report, the identities of the parties involved in this transaction were not immediately available or disclosed.
Such block deals can have a considerable impact on a company’s stock price, and they often attract the attention of investors and market participants as they can signal significant changes in ownership or investor sentiment.
In the June quarter, Restaurant Brands Asia reported a widening net loss of Rs 50.5 crore, compared to Rs 47.5 crore in the same period the previous year. Several factors contributed to this loss, including rising raw material costs for Burger King’s operations in India and increased expenditures associated with expanding its store network.
Despite the increased loss, the company achieved a notable 25 percent year-on-year growth in revenue, with revenue figures climbing from Rs 489.2 crore in the corresponding quarter of the previous fiscal year to Rs 611 crore. This revenue growth reflects the company’s ability to generate higher sales despite facing challenges related to cost pressures.
Looking ahead, the company has maintained its guidance for the future. It anticipates a 10 percent growth in same-store sales (SSSG) for FY24, highlighting its optimism for continued sales growth. Additionally, for FY25, the company has projected an 8 percent growth in same-store sales (SSSG), indicating its commitment to maintaining a positive growth trajectory in the coming years.
Furthermore, Restaurant Brands Asia has set a target of achieving a 67 percent gross margin in FY24 for its India business. This target underscores the company’s focus on improving profitability by managing costs and optimizing its operations.
In summary, despite facing challenges such as rising raw material costs and increased store expansion spending, Restaurant Brands Asia has demonstrated robust revenue growth and remains optimistic about its future performance. The company’s emphasis on same-store sales growth and its gross margin target for FY24 reflect its commitment to achieving sustained profitability and growth in the competitive restaurant industry.
Brokerage firms like ShareKhan and Prabhudas Lilladher have expressed positive sentiments regarding Restaurant Brands Asia’s stock and its potential for favorable risk-reward. Here’s a breakdown of their assessments:
ShareKhan sees a promising risk-reward scenario for the stock, and this optimism is primarily rooted in the expectation of achieving breakeven for Restaurant Brands Asia’s Indonesia business by FY2024. They anticipate that Popeyes, a brand under Restaurant Brands Asia, will play a leading role in driving growth in the medium term. Additionally, ShareKhan notes consistent improvements in the burger business within the Indonesian market, which adds to their positive outlook. The brokerage firm has issued a ‘buy’ recommendation for the stock.
Prabhudas Lilladher also holds a positive view on Restaurant Brands Asia’s prospects, particularly in India. The brokerage firm believes that the company is on track to achieve profitability in the Indian market. They point to improvements in key domestic business parameters, such as average dollar sales (ADS), gross margins, and overall profitability. Furthermore, Prabhudas Lilladher notes that the ongoing business restructuring efforts in Indonesia are showing early signs of success, with the expectation that the Indonesia business will reach cash breakeven by FY2024.
These assessments from prominent brokerage firms indicate a positive outlook for Restaurant Brands Asia, with expectations of improved financial performance, particularly in India, and the potential for significant growth in the Indonesian market, driven by brands like Popeyes. Investors often consider such analysis and recommendations when making investment decisions.
