CARE Ratings Nepal Limited (CRNL) has reaffirmed the ‘CARE-NP BBB’ issuer rating assigned to Bajeko Sekuwa Limited (BSL), citing the company’s well-established market position, nearly four decades of operating experience, experienced management, expanding franchise network, steady revenue growth, and resilient profitability. According to CRNL, an issuer carrying a ‘CARE-NP BBB’ rating is considered to offer a moderate degree of safety regarding timely servicing of financial obligations, although such instruments carry moderate credit risk.
The reaffirmation reflects Bajeko Sekuwa Limited (BSL)’s strong brand identity in Nepal’s casual dining segment, improving market penetration and its growing franchise portfolio, while the company continues to face challenges from intense competition, volatility in food and other input prices, and fluctuations in interest rates. Going forward, the ability of the company to profitably expand its operations, effectively manage working capital and maintain its debt and coverage indicators will remain important factors for its credit profile.
Four Decades of Brand Heritage and Expansion
Bajeko Sekuwa Limited was initially incorporated as a private limited company on November 25, 2009, and was subsequently converted into a public limited company on July 9, 2025. Although the corporate entity was established in 2009, the Bajeko Sekuwa brand has a business history of nearly four decades in Nepal’s food and beverage sector. Starting from a traditional sekuwa, or Nepali barbecue, outlet, the brand has gradually developed into one of the country’s prominent indigenous restaurant chains.
Over the years, its focus on authentic Nepali cuisine, combined with menu diversification and expansion into different markets, has helped establish strong consumer recognition. The company currently offers a diverse menu comprising more than 200 items, allowing it to cater to a broad range of customer preferences. CARE Ratings has noted that the company’s long operating track record has enabled its promoters and management to develop substantial expertise in food preparation, menu innovation and understanding consumer tastes, while maintaining the authenticity of its core sekuwa offering during its expansion.
Operating Income Rises to Rs. 455 Million
Bajeko Sekuwa Limited (BSL) has recorded consistent growth in its operating scale over recent years, with income from operations increasing from Rs. 337 million in FY2024 to Rs. 397 million in FY2025 and Rs. 455 million in FY2026, based on unaudited FY2026 figures. The company’s operating income has grown at a compounded annual growth rate of approximately 26% between FY2022 and FY2026, according to CARE Ratings.
The growth has been supported by increasing revenue from self-operated restaurants, expansion of the franchise network and rising royalty income generated from franchise operations. The established brand name, increasing geographic footprint and growing acceptance of organized dining formats in Nepal have further supported the company’s revenue trajectory. CARE Ratings expects the positive growth trend to continue over the medium term, provided the company is able to maintain its brand strength and effectively execute its expansion plans.
Profitability Strengthens with PBILDT Margin Near 18%
Alongside the increase in revenue, Bajeko Sekuwa Limited (BSL) has also maintained a resilient profitability profile. The company’s PBILDT margin improved from 13.72% in FY2024 to 16.67% in FY2025 and further to 17.95% in FY2026. CARE Ratings has attributed the sustained margin performance partly to the increasing contribution of franchise royalty income, which generally carries relatively low operating costs compared with company-operated outlets.
The company’s gross cash accruals also increased to Rs. 54 million in FY2026 from Rs. 43 million in FY2025, reflecting an improvement in its earnings profile. The increasing contribution from franchise operations is expected to support margin stability as the company expands its network. Bajeko Sekuwa Limited (BSL)’s franchise-led expansion model allows it to grow its footprint with comparatively lower capital requirements while generating recurring royalty income, providing the company with a scalable business model.
Gearing Falls Sharply to 0.22 Times
Bajeko Sekuwa Limited (BSL)’s financial structure has improved significantly over the past three fiscal years, with its overall gearing ratio declining sharply from 2.34 times in FY2024 to 0.34 times in FY2025 and just 0.22 times in FY2026. CARE Ratings has attributed the improvement primarily to capital infusion and a reduction in overall debt levels, which have strengthened the company’s net worth and reduced its financial leverage.
The company’s total outside liabilities to tangible net worth (TOL/TNW) also improved substantially, falling from 3.26 times in FY2024 to 0.41 times in FY2025 and 0.28 times in FY2026. The significantly lower leverage provides Bajeko Sekuwa Limited (BSL) with greater financial flexibility to support its planned growth. CARE Ratings has indicated that the company’s planned expansion of outlets during FY2027 and FY2028 is expected to be financed largely through equity and internally generated funds, which should help prevent a material deterioration in its gearing position.
Interest Coverage Improves to 7.09 Times
The company’s debt-servicing capacity has also strengthened considerably as profitability improved and debt levels declined. Bajeko Sekuwa Limited (BSL)debt-to-gross’s interest coverage ratio increased from 3.08 times in FY2024 to 6.73 times in FY2025 and 7.09 times in FY2026, demonstrating significantly stronger capacity to meet its interest obligations from operating earnings. Similarly, its total debt to gross cash accruals ratio improved from 5.27 times in FY2024 to 4.28 times in FY2025 and 2.91 times in FY2026.
CARE Ratings has considered the company’s debt-service coverage indicators to be adequate, supported by its healthy profitability and conservative leverage profile. However, the rating agency has cautioned that any higher-than-envisaged debt levels that result in a material deterioration in solvency or debt coverage indicators could negatively affect the company’s credit profile.
Franchise Network Reaches 26 Outlets
The franchise model has become a major component of Bajeko Sekuwa Limited (BSL)’s growth strategy. The company currently operates 26 outlets, of which 20 outlets, or approximately 77%, operate under the franchise model, while six outlets, or around 23%, are self-owned. The franchise approach has enabled the company to expand rapidly without requiring the same level of capital investment associated with opening fully company-owned outlets.
The model is also the company’s exclusive approach for international expansion, with all six foreign outlets operating under franchise arrangements. At the same time, Bajeko Sekuwa Limited (BSL) continues to maintain self-owned outlets in strategically important locations to anchor its brand presence and directly operate in high-priority markets. CARE Ratings has considered this combination of franchising and selective self-ownership as a key factor supporting the company’s scalability and recurring royalty income.
Investments in Allied Businesses Increase
Bajeko Sekuwa Limited (BSL) has also been gradually expanding its presence into businesses that complement its core restaurant operations. Its total investments increased to Rs. 94 million in FY2026 from Rs. 53 million in FY2025, with the company deploying capital into allied areas including food processing, distribution and other complementary hospitality-related segments. These investments are expected to strengthen supply-chain efficiency, diversify revenue streams and support the company’s longer-term growth strategy.
Greater integration across sourcing, processing and distribution could also help Bajeko Sekuwa Limited (BSL) improve operational efficiency and maintain consistency in the quality of food products supplied to its growing restaurant network. As the franchise portfolio expands, such supporting businesses could become increasingly important in maintaining centralized standards and ensuring reliable supply across outlets.
Lean Operating Cycle Supports Financial Flexibility
Although restaurant operations are generally working-capital intensive, Bajeko Sekuwa Limited (BSL) has maintained a relatively lean operating cycle, largely because most of its sales are generated through cash transactions and the company has limited receivables. Its collection period increased modestly to five days in FY2026 from two days in FY2025, but remained low compared with many businesses. The company maintains inventory of fresh meat, spices and other perishable food materials to ensure consistent availability and quality across its outlets, with inventory holding reaching around 40 days in FY2026 compared with 36 days in FY2025.
Bajeko Sekuwa Limited (BSL) generally procures raw materials through agents and distributors and receives supplier credit of approximately one to two months. As a result, its net operating cycle remained relatively short at around 17 days in FY2026, compared with two days in FY2025. However, CARE Ratings has cautioned that working-capital requirements could rise as the outlet network expands, particularly because the company may need to provide franchisees with supply-chain logistics, centralized processing and distribution support.
Competition Remains a Key Business Risk
Despite its strong brand recognition, Bajeko Sekuwa Limited (BSL) operates in a highly fragmented and increasingly competitive restaurant industry. The company faces competition from multinational quick-service restaurant chains such as KFC, Pizza Hut and Domino’s, as well as established domestic chains including Burger House, Chicken Station and other emerging fast-casual brands. International and organized restaurant chains generally benefit from stronger financial resources, standardized supply chains and extensive marketing capabilities, enabling them to expand rapidly and compete aggressively for customers.
At the same time, Nepal’s large unorganized restaurant sector, including small eateries and street-food vendors, provides lower-priced alternatives for price-sensitive consumers. This creates pressure from both ends of the market and could restrict Bajeko Sekuwa Limited (BSL)’s pricing flexibility. Nevertheless, the company’s established identity around traditional Nepali sekuwa and its growing network provide differentiation that could help it maintain its position in the increasingly competitive dining market.
Food and Input Price Volatility Could Affect Margins
BSL remains exposed to fluctuations in the prices of food and agricultural commodities used in its operations. The company procures its food materials locally, but prices of meat, spices and other agricultural products can fluctuate due to supply conditions, seasonal factors and broader market pressures. Given the highly competitive nature of the restaurant business, the company may not always be able to immediately pass increased input costs on to customers without affecting demand.
CARE Ratings has noted that BSL’s centralized sourcing of meat and spices, combined with scale-driven procurement arrangements, provides some protection against input price volatility. However, maintaining its current margin profile will depend on the company’s ability to manage procurement efficiently and adjust menu prices in a timely manner while preserving customer demand and competitiveness.
Interest Rate Volatility Remains a Concern
Although BSL’s leverage has declined substantially, the company remains exposed to fluctuations in interest rates because its borrowings are based on a floating-rate structure. Under the arrangement, a premium is added to the monthly base rate of banks and financial institutions, meaning changes in the banking system’s liquidity conditions can influence the company’s borrowing costs.
Any significant increase in base rates could increase the company’s interest burden, potentially putting pressure on profitability and liquidity. However, the company’s low gearing ratio and strong interest coverage provide a degree of financial flexibility against moderate increases in interest costs. CARE Ratings will continue to monitor the company’s debt levels and coverage indicators as it proceeds with its planned expansion.
Experienced Promoters and Management Provide Strength
The company’s long operating history is supported by an experienced promoter group and management team with expertise in the hospitality and related sectors. BSL is managed under the overall guidance of its Board of Directors, chaired by Chetnath Bhandari, who also has business interests and leadership experience across the automotive, retail, information technology and real estate sectors.
Nitima Bhandari, the Managing Director, brings experience in the social and hospitality sectors and is associated with several other ventures, including Baishno Enterprise Private Limited, Bajeko Sekuwa LLC, USA, and Cheni Capital Private Limited. CARE Ratings has considered the experience of the promoters and management team a key strength, particularly as the company seeks to expand its franchise network and strengthen its presence both within Nepal and among diaspora communities abroad.
Future Expansion to Focus on Profitable Growth
Going forward, the ability of Bajeko Sekuwa to profitably scale its operations while maintaining effective working-capital management will remain the primary rating sensitivity. The company is expected to continue expanding its outlet network during FY2027 and FY2028, with growth expected to be funded largely through equity and internally generated capital.
This approach should allow BSL to pursue expansion without materially weakening its current leverage position. However, the company will need to maintain consistent food quality, brand standards and customer experience across both self-owned and franchise outlets as the network expands. Effective supply-chain management, careful selection of franchise partners and continued innovation in menu offerings will also be important to sustaining its competitive position.
‘BBB’ Rating Reflects Stronger Financial Position
Overall, CARE Ratings’ reaffirmation of the ‘CARE-NP BBB’ issuer rating reflects Bajeko Sekuwa’s combination of a long operating track record, strong brand recognition, growing franchise network, rising revenue, resilient profitability and significantly improved financial leverage. The company’s operating income reached Rs. 455 million in FY2026, while its PBILDT margin stood at 17.95%, overall gearing declined to 0.22 times and interest coverage improved to 7.09 times.
These indicators demonstrate a substantial strengthening of the company’s financial position compared with FY2024. Nevertheless, competition, food-price volatility and interest-rate movements remain important risks. Sustaining revenue growth, protecting margins, managing working capital and financing future expansion without significantly increasing debt will be critical for Bajeko Sekuwa to maintain its current credit strength and potentially improve its rating profile over the medium term.
