QSR refers to the shares of companies that operate in the Quick Service Restaurant (QSR) industry. These are fast-food or fast-casual restaurant chains that serve food quickly and at a relatively low cost.
These stocks are typically appealing to investors due to the industry’s steady demand for affordable and convenient meals, as well as the potential for growth through franchise expansion, new product offerings, and international market penetration.
Here are the stocks to watch out for
Jubliant Foodworks Ltd
Jubilant FoodWorks is the master franchisee for Domino’s Pizza and Dunkin’ Donuts in India. It operates a wide network of outlets across the country, offering pizza, sandwiches, and beverages.
Price action
With a market capitalization of Rs. 40,342.94 crores on Wednesday, the shares of Jubilant Foodworks Ltd opened at Rs. 610.80.
Target and Rationale
One of the Leading Indian Brokerage company, Sharekhan, has initiated a “Buy” target price of Rs. 799 with a 31.06 percent upside potential.
The reasons for the “Buy” target are due to its strong growth prospects outlined in its Ambition FY28 strategy. The company aims for a double-digit revenue compound annual growth rate (CAGR) and a 200 basis points (bps) increase in profit after tax (PAT) margins by 2028. JFL’s aggressive expansion plans include scaling up its Domino’s network in India to over 3,000 stores.
Additionally, JFL is focusing its new platforms like Big Big Pizza and Coffy, a coffee brand it plans to make one of the top 3 in Turkey. The company is also committed to maximizing free cash flow and improving unit economics, with a focus on supply chain enhancements and strategic capital allocation, making it an attractive investment opportunity.
Devyani International Ltd
Devyani International is a leading franchisee of brands like Pizza Hut, KFC, and Costa Coffee in India. The company operates a large number of outlets across multiple cities and has a strong foothold in the quick-service restaurant industry.
Price action
With a market capitalization of Rs. 20,259.24 crores on Wednesday, the shares of Devyani International Ltd opened at Rs. 167.95.
Target and Rationale
One of the Leading Indian Brokerage company, Motilal Oswal, has initiated a “Buy” target price of Rs. 215 with a 28.01 percent upside potential.
The reasons for the “Buy” target are due to its strong growth prospects despite facing some short-term challenges. The company has been actively expanding its store network, adding 111 new stores in Q3FY25, and continues to focus on improving profitability through strategic initiatives such as cost optimization and innovation, including the introduction of KFC cafes.
Additionally, the positive impact of government policies aimed at boosting consumption, especially in the QSR sector, provides further confidence in Devyani’s recovery. Given the company’s strategic focus on expanding its footprint, optimizing operations, and improving unit economics, analysts expect a revival in performance.
Sapphire Foods Ltd
Sapphire Foods is one of the largest franchise operators of KFC, Pizza Hut, and Taco Bell in India, Sri Lanka, and the Maldives. It focuses on expanding its footprint in the quick-service restaurant space while maintaining a commitment to quality and customer satisfaction.
Price action
With a market capitalization of Rs. 10,309.41 crores on Wednesday, the shares of Sapphire Foods India Ltd opened at Rs. 321.25.
Target and Rationale
One of the Leading Indian Brokerage company, Motilal Oswal, has initiated a “Buy” target price of Rs. 415 with a 29.69 percent upside potential.
The reasons for the “Buy” target are due to its steady store expansion and growth prospects, supported by the company’s focus on innovation, customer engagement, and value offerings. Despite some challenges, such as weak same-store sales growth (SSSG) and the underperformance of dine-in sales, the company is well-positioned to benefit from a recovery in urban consumption, aided by favorable government measures for the middle class. Sapphire’s strong revenue growth, especially from its KFC and Pizza Hut brands, along with solid performance in Sri Lanka, showcases its potential for future growth.
The company’s focus on optimizing average daily sales (ADS) and improving profitability in the existing network is key to long-term success. Analysts are optimistic about Sapphire’s ability to achieve stable margins and drive growth, particularly with the projected recovery in consumer spending and its ongoing store expansion.
Written by Sridhar J
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