More upside seen in this multibagger stock as IIFL has ‘Buy’ tag

Market


Barbeque Nation shares, that made stock market debut in April last year, have given multibagger return in about a year’s period by rallying over 135% since listing. Brokerage firm IIFL sees more upside on the multibagger stock as it said the management sees huge potential for the established players to gain share, given the large market size of the Indian food services industry.

“The company currently operates 180 restaurants, with plans to reach 300 restaurants by the end of FY25, reflecting strong revenue visibility. In the medium term, the company plans to focus on core business (i.e. BBQ Nation, home-delivery and Toscano), with International business and extended kitchens acting as the satellites,” the brokerage note added. IIFL’s buy rating on the stock comes with a 12-month target price of 1,800 per share.

The management is further optimistic of delivering EBITDA (earnings before interest, taxes, depreciation, and amortization) margins of 15% and ROE upwards of 20%, driven by healthy store economics.

“The management attributed higher mix of delivery (~16% of sales) as an important driver for improved store economics. The management plans to further grow its delivery business through menu innovation, offering products at different price points and increasing number of outlets,” IIFL added as it hosted Rahul Agrawal, Wholetime Director & CEO – Barbeque Nation Hospitality (BNHL), at IIFL’s XIII Enterprising India 2022 Investors’ Conference.

Strong outlook of store additions, healthy unit economics and increasing footfalls in dine-in will be the key growth catalysts for the company. International business profitability is in line with India’s now, with 2 stores in the pipeline, the brokerage added.

Shares of BBQ nation are down about 7% in a month, and over 2% in 2022 so far (year-to-date or YTD), whereas it is up over 23% in the last six months.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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