NewsStocksMacquarie Cuts Target Prices on Devyani, Westlife, and QSR Stocks Amid Slow Demand RecoveryMacquarie Cuts Target Prices on Devyani, Westlife, and QSR Stocks Amid Slow Demand Recovery
Macquarie has significantly revised down earnings estimates and target prices for India's QSR sector due to slower-than-expected demand recovery. The brokerage cut EPS estimates by 7-23% for FY26-FY28 and reduced target prices by 7-20% across major players including Devyani International, Westlife Foodworld, and Sapphire Foods. Despite near-term challenges, Macquarie remains selectively constructive, expecting recovery only in the second half of 2026.
*this image is generated using AI for illustrative purposes only.
India's listed restaurant operators face a challenging period as demand recovery remains slower than anticipated, prompting Macquarie to revise down earnings estimates and target prices across the quick-service restaurant (QSR) sector. The brokerage expects any meaningful recovery to materialize only in the second half of calendar year 2026, with delivery continuing to outperform dine-in segments.
Subdued Performance in December Quarter
Macquarie's analysis indicates that the December quarter marked another weak phase for consumption, with the festive season failing to deliver a material uplift in same-store sales (SSS). According to the brokerage's channel checks, SSS growth across QSR chains remained muted in the third quarter, with even Jubilant FoodWorks' relative strength appearing to moderate toward the end of December.
The delivery segment continues to provide some cushion for operators, but dine-in traffic has yet to show sustained improvement, raising concerns about near-term revenue momentum across different restaurant formats.
Significant Earnings and Target Price Revisions
The delayed recovery has prompted Macquarie to implement substantial revisions across major listed players. The brokerage cut EPS estimates by 7-23% for FY26-FY28, with broad-based downgrades affecting the entire sector.
| Company | Previous Target (₹) | Revised Target (₹) | Reduction (%) |
|---|---|---|---|
| Devyani International | 200 | 160 | 20% |
| Westlife Foodworld | 750 | 600 | 20% |
| Sapphire Foods | 335 | 270 | 19% |
| Jubilant FoodWorks | 495 | 460 | 7% |
Notably, 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 been revised down to a lesser extent than earnings, as Macquarie rolled valuations forward by a quarter.
Selective Optimism Despite Challenges
Despite the near-term weakness, Macquarie maintains a selectively constructive outlook on the sector. The brokerage expects government measures to support small-ticket discretionary spending, which could aid recovery in late 2026. This optimism draws comfort from early green shoots observed in FMCG demand.
Macquarie's preference hierarchy includes:
- Top preference: Devyani and Sapphire Foods, citing strong global formats such as KFC and McDonald's
- Second preference: Westlife Foodworld
- Cautious approach: Jubilant FoodWorks due to potential pressure on like-for-like growth from a high base
The brokerage also sees the recent merger of Yum! franchisees as improving the growth outlook, particularly for Pizza Hut operations.
Market Outlook and Recovery Timeline
Macquarie's revised timeline pushes meaningful sector recovery to the second half of calendar year 2026, reflecting the persistent challenges in consumer discretionary spending. The brokerage noted that visibility on a turnaround remains limited in the near term, with gradual recovery expected over the next few quarters rather than any immediate improvement.
19
