Major states like Maharashtra, Delhi, Gujarat and others have allowed opening up of restaurants with dine-in facilities with limited capacity till the permissible time hours. Convenience channels like take away, drive through, home delivery and parcel facilities, too, are aiding sales.
India’s food services industry has come a long way in the last three decades. The market, which was earlier dominated by unorganised players, has witnessed a structural shift towards the organised players. The QSR format seems to be offering the perfect mix of maintaining decent consumer connect along with being lucrative.
Analysts are bullish on the QSR segment as these companies have expanded their portfolios from pizza, pasta and burgers to beverages, breakfast, fried chicken and rice bowl to enhance consumer offering.
How the stocks are faring
Shares of specialty restaurants have surged over 80 per cent in the last one year, and 51 per cent in just a month.
has surged over 91 per cent in the last one year and 15 per cent in the last one month.
has rallied 70 per cent in the last one year, and 14 per cent in a month. Recently listed Barbeque Nation and Burger King India have gained 46 per cent and 24 per cent, respectively, in the last one month.
Analysts are bullish on the prospects of the food services industry, with QSR leading the way. They are positive on the sector as the QSR format will be the quickest to recover from any easing of restrictions.
In its recent report on the industry, brokerage firm Nirmal Bang Institutional Equities said, QSR sector will benefit as the format has transitioned to comfort food across price segments, catering to all segments and aspirational demand in non-metro areas.
Growth within discretionary space will be led by this segment on the back of value-centric customer proposition, premiumisation, ramp-up in convenience channel, introduction of innovations and product platforms, and store expansion beyond metros & tier-I areas, the report added.
“International QSRs have struck a chord with Indian consumers through their value proposition, affordable meal options and discounted prices on combos. While value remains the belly of the market, companies have not shied away from introducing premium offerings, which aid in these companies increasing ticket sizes as well,” it added.
The top players in the QSR space are poised to gain big due to the necessary infrastructure, healthy balance sheets and an established channel to cater to the consumer demand.
Likhita Chepa of CapitalVia Global Research said the outlook for the QSR industry seems to be improving. “Burger King has been one of the fastest expanding quick service restaurant chains in the country. The company is on track to have 320 restaurants by FY22 with 38 more in the pipeline,” she said, and maintained a ‘Buy’ rating on the stock.
Nirmal Bang has initiated coverage on Burger King with an ‘accumulate’ rating and a price target of Rs 155. It has a similar rating on Jubilant Foodworks with a target price of Rs 3,110. Westlife Development is a ‘buy’ for the brokerage with a target price of Rs 560.
Brokerage firm Emkay Global has given a ‘buy’ rating to Jubilant Foodworks with a target price of Rs 3,400. “The company continues to provide a strong earnings growth outlook, and higher store expansions can still drive upsides. Domino’s strong digital/delivery capabilities, faster store additions and new formats offer plenty of reasons to remain positive,” it said.
However, not everyone is bullish on the sector. IDBI Capital has given ‘reduce’ rating to Jubilant Foodworks with a target price of Rs 2,772 after the recent rally in the stock. However, the company’s March quarter results were in line, the brokerage said.