Indian QSR Stocks Face Slow Demand Recovery: Macquarie Cuts Targets
India’s listed restaurant operators are staring at a slower-than-expected demand recovery, prompting Macquarie to cut earnings estimates and target prices across the sector. In its latest note, the brokerage said demand remains subdued, with delivery continuing to outperform dine-in, and expects any meaningful recovery to now play out only in the second half of calendar year 2026.
Macquarie believes the December quarter marked another weak phase for consumption, with the festive season failing to deliver a material uplift in same-store sales (SSS). While the brokerage expects a gradual recovery over the next few quarters, it cautioned that visibility on a turnaround remains limited in the near term.
QSR Chains See Muted SSS Growth
According to Macquarie’s channel checks, SSS growth across quick-service restaurant (QSR) chains stayed muted in the third quarter. Jubilant FoodWorks is likely to outperform peers on SSS, but even this relative strength appears to have moderated toward the end of December.
The brokerage said delivery continues to provide some cushion, but dine-in traffic has yet to show sustained improvement, raising concerns around near-term revenue momentum across formats.
EPS Estimates and Target Price Cuts
The delayed recovery has led Macquarie to cut EPS estimates by 7–23% for FY26–FY28 across major listed players. While EPS downgrades are broad-based, the brokerage noted that Jubilant’s cuts are lower than peers, helped by stronger performance in Turkey, which partially offsets an expected 11% decline in standalone India EPS.
Target prices have also been revised down, though to a lesser extent than earnings, as Macquarie rolled valuations forward by a quarter. Target prices for Devyani International have been cut by 20% from Rs 200 to Rs 160. Similarly, Westlife Foodworld also saw a 20% target cut from Rs 750 to Rs 600.
Sapphire Foods saw a 19% cut from Rs 335 to Rs 270. Jubilant’s target price was also lowered by 7% to Rs 460, from the earlier Rs 495.
Selective Constructive View on the Sector
Despite near-term weakness, Macquarie remains selectively constructive on the sector. It expects government measures to support small-ticket discretionary spending to aid a recovery in late 2026, drawing comfort from early green shoots in FMCG demand.
The brokerage continues to prefer Devyani and Sapphire, followed by Westlife, citing strong global formats such as KFC and McDonald’s. It also sees the recent merger of Yum! franchisees improving the growth outlook, particularly for Pizza Hut. Jubilant, however, remains a cautious call due to potential pressure on like-for-like growth from a high base, which could weigh on margin expectations.
Investment Implications
For investors, the Macquarie report highlights the need for caution in the QSR sector, at least in the near term. While the brokerage’s constructive view on the sector is encouraging, the cuts to EPS estimates and target prices are a reminder that the road to recovery will be slow and potentially bumpy.
Investors looking to enter the QSR space may want to consider Devyani International and Sapphire Foods, given their strong global formats and relatively better performance. However, it’s essential to keep a close eye on the companies’ financials and industry trends to make informed investment decisions.
In conclusion, the Macquarie report serves as a reminder that the QSR sector is facing significant challenges, and investors need to be patient and cautious in their approach. By keeping a close eye on industry trends and company performance, investors can make informed decisions and potentially capitalize on the sector’s long-term growth potential.