INDIA QSR 1QFY27 preview: Expect mixed quarter on SSSG trends; Buy rated on Devyani

Research evidence excerpt

INDIA QSR 1QFY27 preview: Expect mixed quarter on SSSG trends; Buy rated on Devyani

Goldman Sachs India QSR

Exhibit 4: Target price changes and ratings - We prefer Devyani within our QSR coverage

Up/Down % change in

Company Rating Revised TP Previous TP

side TP

Jubilant Foodworks Neutral 460 7% 460 0%

Devyani International Buy 140 24% 142 -1%

Sapphire Foods Not Rated

Westlife Neutral 490 -3% 500 -2%

Source: Goldman Sachs Global Investment Research

Price Target Risks and Methodology - Devyani International Ltd.

We value Devyani’s organic business (largely India) on a 27x Q5 to Q8 EBITDA (pre-Ind

AS 116) multiple (20% discount to India Consumer Discretionary coverage). For the

recently acquired Thailand KFC business, we assign a target EV/EBITDA multiple of 12x.

This is consistent with the GS target multiple for Thai Bev’s restaurant business (for

similar revenue growth rates), and ~15% discount to the GS target multiple for KFC

business of Yum China (Thailand has ~2x QSR penetration vs. China). Our 12m target

price is Rs140, with Rs10 for the Thailand KFC business. We have a Buy rating.

Key downside risks include 1) increased competitive intensity from new entrants and

unorganized players, 2) pressure of increasing take rates from online food aggregators,

3) longer-than-expected cyclical slowdown, 4) unexpected food safety concerns, and 5)

change in consumer preferences.

Price Target Risks and Methodology - Jubilant Foodworks

Our 12m target price is Rs460. We value the India business at 27x EV/EBITDA (pre-Ind

AS 116) (~20% discount to the average of our consumer discretionary coverage) and DP

Eurasia on 20x (unchanged) P/E ratio, both on our Q5-Q8 estimates. The key upside risks

to our Neutral rating are (1) stronger-than-expected LFL growth in the India business;