Ichibanya share up after impressive FY 25 results

Ichibanya's financial results for FY 2025, published on April 4, 2025, demonstrated a decent 10.6% y/y increase in revenue, reaching JPY61bn, driven by increased demand. EBIT rose 4.5% to JPY4.9bn, with a margin of 8.1%. Net profit increased by 18.1% y/y to JPY3.2bn, with the margin expanding to 5.2%, driven by extraordinary income. The stock price reacted positively to the results, rising by about 4% to date.

Founded in 1978 and headquartered in Ichinomiya, Japan, Ichibanya Co., Ltd. operates curry specialty restaurants under the name Curry House CoCo Ichibanya. With over 1,150 employees, the company provides curry dishes through both directly managed stores and franchise chain (FC) stores.

In addition, Ichibanya Co., Ltd. sells foodstuffs, consumable supplies, and equipment to its FCs. The company is also involved in the franchise business, trade, and consulting services through its subsidiaries. Listed on the Tokyo Stock Exchange, Ichibanya Co., Ltd. generates 83% of its revenue domestically and 17% internationally.

Optimistic financial outlook

Ichibanya Co., Ltd. has provided consolidated earnings guidance for the six months ending August 31, 2025, and the full year ending February 28, 2026. For the six-month period, the company anticipates net sales of JPY32,300m, operating profit of JPY2,200m, and net profit of JPY1,200m. For the full year, Ichibanya expects net sales to reach JPY67,300m, operating profit to be JPY5,400m, and net income to amount to JPY3,300m.

In a strategic move to enhance shareholder value, on April 4, 2025, Ichibanya's Board of Directors updated the company's dividend policy. The new policy aims to provide stable dividends while ensuring continued investments for growth, setting a minimum annual dividend per share at JPY16. Accordingly, the company has declared a dividend of JPY16 per share in FY 25, reflecting a yield of 1.7%.

Furthermore, restaurant sales have demonstrated robust growth from FY 20 to FY 24, posting a CAGR of 7.5% to reach JPY105bn in FY 2024. This impressive performance underscores Ichibanya's strong market position and its ability to capitalize on increasing demand for its curry specialty offerings.

Consistent long-term performance

Ichibanya experienced a decent revenue CAGR of 10.7% over the last three years (FY 22-25), reaching JPY61bn in FY 25. Revenue growth was achieved through an increase in sales. EBIT grew at a CAGR of 19.9% to JPY4.9bn, driven by operational efficiency. As a result, EBIT margins expanded by 170 bps to 8.1%. Net profit rose to JPY3.2bn, reflecting a CAGR of 2.8% over the same period.

Positive cash from operation, generated cumulative CFO of JPY20.6bn over the past three years (FY 22-25). However, cash and cash equivalents decreased from JPY17.6bn in FY 22 to JPY15.2bn in FY 25, owing to high capex activities and acquisitions. ROE rose from 9.6% to 10.1% in FY 25.

In comparison, its local peer, Yoshinoya Holdings Co., Ltd., experienced a revenue CAGR of 10% in the past three years, reaching JPY205bn in FY 24. Net income reportedly fell at a CAGR of 22.4% to JPY3.8bn.

Moderation in valuation

Over the past year, Ichibanya's stock has delivered negative returns of approximately 14%, while Yoshinoya posted decent returns of about 9% over the same period.

The company is currently trading at a P/E of 46x, based on the FY 2026 estimated EPS of JPY20.7, which is lower than its three-year historical average of 60.1x and Yoshinoya‘s 47.1x.

Ichibanya has very limited coverage and is currently tracked by only one analyst, who has a ‘Hold’ rating for an average target price of JPY1,000, implying 5.5% upside potential at its current level. The analyst’s view is further supported by an anticipated revenue CAGR of 9.4% over FY 24-27, reaching JPY72bn. EBIT is expected to grow at a CAGR of 8.4%, reaching JPY6bn. Net income is expected to grow at a CAGR of 11.3% to JPY3.7bn, with a margin of 5.1%, and EPS is projected to grow to JPY23.2 in FY 27 from JPY16.8 in FY 24. However, analysts estimate an EBIT CAGR of 0.5% and a negative net profit CAGR of 5% for Yoshinoya.

Overall, Ichibanya Co., Ltd. announced impressive FY 25 results, with significant increases in revenue, EBIT, and net profit driven by strong demand and operational efficiency. The company provided optimistic earnings guidance for FY 26 and updated its dividend policy to ensure stable dividends while maintaining growth investments. Despite recent negative stock returns, analysts remain optimistic about future growth, supported by strong revenue and profit projections. The company continues to capitalize on its market position and curry specialty offerings. However, the company faces operational risk and regulatory risk.