Active Stocks
Sat May 18 2024 12:28:26
  1. Tata Motors share price
  2. 953.70 0.84%
  1. Power Grid Corporation Of India share price
  2. 316.75 1.09%
  1. Tata Steel share price
  2. 167.75 0.30%
  1. ITC share price
  2. 436.50 -0.02%
  1. State Bank Of India share price
  2. 820.90 0.37%
Business News/ Markets / Stock Markets/  QSR sector sees no material recovery in 3QFY24, says Antique Stock Broking; prefers Sapphire Foods, Devyani Intl
BackBack

QSR sector sees no material recovery in 3QFY24, says Antique Stock Broking; prefers Sapphire Foods, Devyani Intl

QSR companies have not witnessed any material recovery in 3QFY24 compared to 2QFY24. Antique Stock Broking maintains a SELL rating on Jubilant FoodWorks due to near-term headwinds in the pizza segment, while preferring Devyani International and Sapphire Foods for their stable performance in KFC.

QSR companies have not witnessed any material recovery in 3QFY24 compared to 2QFY24, despite expectations of strong sequential recovery due to the weak base and inflation impacting discretionary spending: Antique broking. Photo: Courtesy Sapphire Foods websitePremium
QSR companies have not witnessed any material recovery in 3QFY24 compared to 2QFY24, despite expectations of strong sequential recovery due to the weak base and inflation impacting discretionary spending: Antique broking. Photo: Courtesy Sapphire Foods website

In its latest sector update report on Quick Service Restaurants (QSR) companies, brokerage house Antique Stock Broking stated that the holiday season and sporting events did not lead to a recovery.

The brokerage said in its report that despite the holiday season and important sporting events, sequential demand (for the third quarter) has not shown any appreciable recovery based on the brokerage's interactions with channel partners.

Also Read: Zomato rings in record New Year's Eve, delivering almost as much as combined orders of NYE 15, 16, 17, 18, 19, 20

“QSR companies have not witnessed any material recovery in 3QFY24 compared to 2QFY24. There were expectations of strong sequential recovery in 3Q due to the weak base on account of a longer Shravan month (veg eating month), delayed festivals, and inflation impacting discretionary spending," the brokerage said.

Customers' down trading and the increased level of competition have continued to have an impact on the pizza segment during the quarter. Furthermore, demand across QSR companies remained soft compared to the previous year, even during the highest revenue-generating week of December last week.

"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

Also Read: M&M auto sales in December rise 6% YoY to 60,188 units; tractor sales drop 18%

By introducing more promotions (higher discounts during the festive/match days) and more reasonably priced pizzas, Domino's and Pizza Hut are trying to increase customer foot traffic, the brokerage said in its report.

However, the brokerage thinks that because of its superior delivery model, Domino's will outperform Pizza Hut. In addition, KFC's sequential performance has not significantly improved despite its weak foundation (longer Shravan month). Due to last year's high base, Westlife's performance in the burger business will be impacted, but Restaurant Brands Asia's performance should improve as a result of expanding its beverage portfolio.

Also Read: Stocks to buy this week: Wipro, Eicher Motors, IPCA Labs among 9 technical picks; do you own any?

"At current levels, we prefer Devyani International and Sapphire Foods driven by stable performance in KFC, as risk-reward remains favourable. We maintain SELL on Jubilant FoodWorks due to near-term headwinds in the pizza segment," said the brokerage.

Additionally, the brokerage noted in its report that the major sporting event of the year—the Cricket World Cup—was anticipated to spur recovery. Demands increased on festival days and on important match days (India playing the ICC World Cup), according to its interactions. Foot traffic was negatively impacted by QSR companies after the World Cup and the holiday season, as the demand momentum could not be maintained.

Also Read: Why Anil Ambani-backed Reliance Power share price is skyrocketing — explained

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

The promoters of HT Media Ltd, which publishes Mint, and Jubilant Foodworks are closely related. There are, however, no promoter cross-holdings.

 

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed - it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 01 Jan 2024, 12:54 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started