Motilal Oswal Financial Services has reiterated a ‘Buy’ rating on Restaurant Brands Asia (RBA) — the India and Indonesia franchise operator of Burger King — citing a compelling 65% upside potential from current levels. With a target price of INR 135 against a current market price (CMP) of INR 82, the brokerage believes RBA is at an inflection point, driven by strong operational turnaround in India, digital innovation, and strategic cost initiatives.
The bullish view comes despite near-term losses, as the firm bets on long-term operating leverage and favorable macro trends within India’s QSR (Quick Service Restaurant) industry.
🔍 Key Investment Thesis: Why Motilal Oswal is Bullish on RBA
Motilal Oswal’s conviction is built around four structural pillar
#1 India: The Crown Jewel in RBA’s Portfolio 🇮🇳
India accounted for ~78% of RBA’s Q4FY25 revenue, and it’s here that the real story lies. Motilal Oswal’s analysts describe RBA’s Indian operations as the “best performer in dine-in among QSR peers”, outshining even legacy players.
- Same-Store Sales Growth (SSSG) in Q4FY25 was +5.1% YoY, led by dine-in traffic (+9%) and value-based menu options.
- EBITDA (Pre-Ind-AS) surged 151% YoY to INR 26.6 crore, with margin expansion of 300 bps to 5.4%.
- Gross margins stayed strong at 67.8%, with raw material inflation offset by supply chain efficiencies.
- App adoption soared 3x YoY, with digital orders making up 90% of dine-in sales at some stores.
Motilal Oswal expects India’s EBITDA margins to hit 16.7% by FY27, buoyed by deeper BK Café penetration (now in 90% of stores), better menu curation, and leaner operating expenses.
“RBA has delivered positive SSSG in FY25 unlike most QSR peers. Its execution on value offerings, digital engagement, and cost controls has led to sustainable margin expansion,” the report states.
#2 Cost Optimization 🛠️
The company has embarked on aggressive cost-cutting across utilities, rentals, and G&A expenses. Key metrics reflect this:
- EV/EBITDA (Pre-Ind-AS) is expected to fall from 121.9x in FY25 to 19.7x by FY27, demonstrating operating leverage from store maturity.
- Capex per restaurant in India is a controlled INR 2.7 crore, indicating disciplined expansion.
RBA is also restructuring its Indonesia G&A, targeting a INR 45 crore cost cut in FY26 — crucial for limiting losses from the overseas operations.
#3 BK App and Self-Ordering Kiosks (SOKs) 📱
Motilal Oswal highlights RBA’s digital transformation as a competitive edge:
- The BK App has seen 28% YoY growth in installs (18 million cumulative).
- Self-ordering kiosks (SOKs) are now mainstream across major locations.
- In FY25, dine-in app transactions tripled, and nearly all in-store traffic is now digitally integrated.
This “phygital” approach not only enhances customer stickiness, but also reduces manpower and fixed costs, driving margin efficiency.
#4 Indonesia: Pain Easing, Turnaround in Sight 🇮🇩
Despite contributing to losses, Motilal Oswal notes green shoots in Indonesia:
- SSSG returned to +2% in Q4FY25, reversing earlier declines.
- Average Daily Sales (ADS) rose 5% YoY.
- Losses narrowed from INR 7 to 2.7 crore in Restaurant Operating Margin (ROM).
- No new store capex planned; the focus is on profitability and store rationalization.
With selective price hikes, rental renegotiations, and ad campaigns targeting brand recall, the management expects gradual margin recovery in FY26–27.
📊 Financial Forecasts
| Metric | FY25 | FY26E | FY27E |
|---|---|---|---|
| Revenue | 2,550 | 2,950 | 3,440 |
| EBITDA | 270 | 410 | 570 |
| EBITDA Margin (%) | 10.7% | 13.8% | 16.7% |
| Adj. PAT | (230) | (140) | (20) |
| RoCE (%) | -3.0% | 1.1% | 5.7% |
| EV/EBITDA (x) Pre-IndAS | 121.9 | 44.5 | 19.7 |
While net profits remain elusive due to high depreciation and interest costs, EBITDA and margin improvement is strong and consistent, according to Motilal Oswal.
Expansion Plans 🏪
- RBA plans to open 60–80 stores per year in India, targeting 800 stores by FY29.
- New formats like BK Café and innovative menu items (e.g. Korean Spicy Fest, Mutton Whopper Jr.) are key traffic drivers.
With store maturity, digital penetration, and dine-in growth all trending upward, RBA is well-positioned for store-led revenue compounding, Motilal Oswal suggests.
📈 Valuation: Room to Re-Rate
Motilal Oswal assigns:
- India business valuation at 30x FY27E EV/EBITDA (pre-Ind-AS)
- Indonesia business valuation at ₹5 billion (0.75x FY27E EV/sales)
This implies a fair value of INR 135/share, up 65% from the current price of INR 82 per share.
RBA Post-IPO Performance
Burger King India launched its IPO on 2 December 2020. The IPO was a mix of fresh issue and OFS and was sized at INR 810 crore. The IPO got an overwhelming response from the investors, which led to a subscription of 156X. RBA IPO listed with 125% gains. However, Burger King lost its momentum and fell to the lowest level of INR 60.45 per share on 28 March 2025. Currently, it is trading around INR 82 per share, up 36% from the IPO allotment price of INR 60 per share.
Risks to Watch ⚠️
- Continued consolidated losses if Indonesia fails to turn profitable.
- Execution risk in store expansion and digital transformation.
- Consumer demand shocks or geopolitical escalations in Indonesia.
Final Word 📝
Despite near-term losses, RBA is transitioning from a struggling QSR franchise to a focused, efficient, and digital-savvy retail operator. Motilal Oswal’s bullish call reflects confidence in management’s execution, market positioning, and strategic clarity.
For investors with a 2–3 year horizon, this might just be a rare opportunity to own a fast-food brand at a value price — before the margins are fully digested by the market.
Highlights
📍CMP: INR 82
🎯Target Price: INR 135
📈Upside Potential: +65%
🛒Recommendation: BUY
🏷️Valuation Basis: 30x FY27E EV/EBITDA for India ops
Disclaimer: This article is for informational purposes and does not constitute investment advice. Please consult a certified financial advisor before investing.