** Morningstar upgrades earnings forecast for Collins Foods CKF.AX on improving productivity in Australia KFC stores and margins tracking ahead of annual estimates

** Restaurant operator on Monday logged 29.5% rise in HY26 underlying NPAT to A$27.2 million ($17.83 million), lifts FY26 NPAT growth forecast to "mid-to-high-teens" from earlier "low-to-mid-teens"

** Investment research firm lifts fair value estimate by 4% to A$14.5, hikes FY underlying NPAT estimate by 3%

** Says consumer sentiment is recovering and should allow Collins to reclaim some lost gross margin

** Citi sees more upside for Collins as co scales up in Germany via new development and acquisitions

** Adds it does not view co's 19.4 multiple price-to-earnings ratio as "expensive" on short-term earnings momentum and improvement in medium-term growth trajectory in recent times

** Stock up 54.3% so far this year, as of last close

($1 = 1.5253 Australian dollars)

(Reporting by Nikita Maria Jino in Bengaluru)

((Nikita.Jino@thomsonreuters.com;))