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Macquarie sees Q2 QSR recovery, with Devyani offering up to 27% upside
Our read
India QSR valuations can rerate over the next two to four quarters if Q2 confirms a transaction-led same-store-sales recovery and margin leverage; Devyani has the largest stated upside, while the sector's main risk is a promotion-heavy, uneven demand rebound.
For operators
Macquarie’s improving Q2 demand outlook suggests QSR operators should prioritize same-store sales execution and margin discipline as consumer traffic recovers.
Watch
Q2 same-store-sales growth exceeds consensus and is driven by transactions rather than pricing alone.
The report,
Macquarie expects India QSR demand and same-store sales to improve in Q2, favoring Devyani International, Sapphire Foods and Westlife. It upgraded Jubilant FoodWorks to Neutral, citing stronger Popeyes performance and potential operating leverage-driven margin expansion.
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Reported figures
From the report. Source details below
| Devyani International target price: | Rs 190 versus Rs 149 current price; 27% implied upside |
|---|---|
| Westlife Foodworld target price: | Rs 730 versus Rs 583; nearly 25% implied upside |
| Sapphire Foods India target price: | Rs 300 versus Rs 250; around 20% implied upside |
| Jubilant FoodWorks target price: | Rs 520 versus Rs 508; around 3% implied upside |
| FY29 EPS estimates raised by | more than 20% |
What to watch next
- Sequential EBITDA-margin expansion from operating leverage and lower promotional spending.
- Management raises FY growth, store-opening or margin guidance.
- Evidence of sustained Popeyes traction and improved unit economics at Jubilant FoodWorks.
- Consumer-spending weakness, food inflation, aggressive discounting or slower delivery demand.
The counter-case
The case against this reading — not reported by the source.
The recovery call may be premature if urban discretionary spending remains soft, food inflation pressures traffic or franchisees lean on discounting to protect volumes. Same-store sales improvement can also be driven by easy comparisons rather than durable demand, while wage, rent, delivery-platform commissions and input costs could limit the expected margin leverage. Devyani's implied upside depends on execution across multiple brands and continued store expansion without cannibalisation or weaker unit economics; Popeyes momentum at Jubilant may not yet be large enough to offset broader competitive and investment pressures.
The source
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