The Restaurant Group’s (TRG) announcement yesterday (1 March) that it had renegotiated is debt facilities has been met with positive notes from analysts.

Liberum has increased its target price for TRG to 135p, from 110p, and has retained its Buy recommendation “as a key recovery play”.

“With all £470m of previous debt facilities set to mature in July 2022, we had expected a mix of debt and equity, but this announcement provides a more flexible option with no dilution, so should be well received by investors,” read the note from Liberum.

Liberum said it believed there was additional earnings upside potential given the reduction in industry supply across the restaurant and casual dining markets.

“We expect Restaurant Group to capture additional market share across both dine-in and takeaway/delivery as shown in its trading performance in-between lockdowns, with a much improved margin outlook following its restructuring,” it said.

Peel Hunt said the new, slightly increased, debt facility at minimal additional cost was positive. Net debt for 2020 was also lower, at £340m, than expected and the company’s financial headroom is currently around £70m based on the new facility – up from £40m it said.

The analyst adjusted its forecasts slightly, but said it was likely to change again after the Budget tomorrow (3 March). It has raised its target price to 125p, from 100p, but cut its recommendation from Buy to Add.

The note highlighted the increase in delivery sales in TRG’s Leisure business – up 5x “on a small pre-pandemic base”, with Wagamama’s delivery sales averaging £2.5m per week over the three weeks o 21 February 2021.

“The company argues that having half its sites operating for delivery and takeaway should help it to re-open all but its Concessions sites within two weeks of the 17 May sector reopening date,” added the note.