Macquarie sees Q2 QSR recovery, with Devyani offering up to 27% upside
Macquarie expects improving Q2 demand and same-store sales trends for India’s quick-service restaurant operators. It sees target-price upside for Devyani International, Westlife Foodworld and Sapphire Foods, while upgrading Jubilant FoodWorks to Neutral on Popeyes momentum and potential margin leverage.
What happened
Macquarie expects India QSR demand and same-store sales to improve in Q2, favoring Devyani International, Sapphire Foods and Westlife. It upgraded Jubilant
Key facts
- 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
- Merged Devyani-Sapphire valuation: around 16x FY29 EV/pre-Ind AS EBITDA
- Westlife valuation: around 19x FY29 EV/pre-Ind AS EBITDA
- Jubilant FoodWorks India valuation: around 22x FY29 EV/pre-Ind AS EBITDA
- FY29 EPS estimates raised by more than 20%
Why this matters
The outlook favors franchise-led scale, brand portfolio expansion and margin-accretive growth opportunities as QSR demand conditions strengthen.
What to watch
- Q2 same-store-sales growth exceeds consensus and is driven by transactions rather than pricing alone.
- 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.
- Material shortfall in store productivity or increased losses from new-format expansion.
- Track monthly/quarterly same-store-sales commentary, transaction growth and average ticket trends for Devyani, Westlife, Sapphire and Jubilant.
- Monitor promotional intensity and aggregators' discounting, especially in burgers, pizza and fried chicken.
- Compare new-store additions with mature-store productivity and EBITDA margin progression.
- Watch whether Popeyes store expansion, sales mix and unit economics provide the anticipated earnings leverage for Jubilant FoodWorks.
- Assess valuation sensitivity if consensus earnings upgrades fail to follow the demand-recovery narrative.