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The rating agency ICRA in its latest report has said that India's quick service restaurant industry is likely to witness 20-25 per cent growth in the current financial year (FY24) on account of the demand uptick and increasing penetration driven by a rapid expansion of stores. It noted that over the long-term, revenue growth shall be supported by factors like rising QSR penetration levels, a shift from the unorganised to the organised segment with a preference for branded quick service restaurant (QSR) players, given the hygiene and convenience factors (delivery over dine-in), etc.

However, the report stated that downside risks to the estimates remain from the emergence of any further Covid waves or any material weakening in purchasing power due to a high inflationary interest-rate regime. ICRA estimates that the top five players in the domestic quick-service restaurant industry are likely to add approximately 2,300 stores between FY2023-FY2025 with an estimated capex at around Rs 5,800 crore (excluding refurbishment) for this period, twice that of the levels seen during the pre-Covid era.

According to the report, majority of capex is expected to be funded through internal accruals and cash on the books, having raised money through the pre-IPO /IPO route in the last two fiscals to support the planned capex in the near- to medium-term. India's dependence on imports for edible oils further exposes the players' margins to geo-political risks and forex fluctuations.