Restaurant Brands Asia (RBA IN) – Q2FY26 Result Update – Demand revival, Indonesia exit key to re-rating – Accumulate

RBA reported SSSG of 2.8%, driven by its continued focus on strengthening the value proposition and healthy store traffic. ADS stood at Rs 119k, reflecting stable consumer traction. However, adjusted loss widened to Rs202mn, due to ~18% YoY increase in manpower costs and higher overheads. This was partially offset by higher other income, which rose from Rs71mn to Rs 115mn. The Indonesia business remained a drag, with sales declining 3.9% YoY, though RBA highlighted early signs of demand recovery supported by a stabilizing geopolitical environment and the completion of store rationalization. RBA also seems open to divesting the Indonesia business if a suitable opportunity arises. We believe exit from Indonesia could allow RBA to unlock value and reallocate capital towards its India operations, which offer a more stable macro backdrop and a long runway for growth. RBA’s India strategy is on track given 1) Value focus with combos (2 veg Burgers at Rs79, Chicken at Rs99, and Café at Rs99) 2) digital driven ordering 3) cost reduction in delivery business 4) control over overheads and 5) gradual increase in ADS of Café business from current levels of Rs13k led by innovation and combo offerings. We estimate India business to turn PBT from operations positive by FY28 only. Near term outlook looks cautiously optimistic as demand revival on the account of GST reforms and cost control hold key to improving margins. Retain Accumulate with SOTP based target price of Rs87 with back ended returns.