“Buy” The Stock Of Westlife Devp, Says The Head Of Research, Prabhudas Lilladher

Amnish Aggarwal - Head of Research, Prabhudas Lilladher Pvt Ltd has recommended buying the stock of Westlife Development for a price target of Rs 847.

"We maintain our positive stance following strong growth momentum and margin expansion in 2Q23. WFL's results were encouraging with EBITDA margin expansion of 523bps YoY/54bps QoQ bucking the trend of QSR peers. A stable to declining RM basket bodes well for the company to further protect/increase margins with a ~2% blended price hike across the portfolio. WFL continues to gain market share across territories with menu innovations - Fried Chicken (South India) and Gourmet Burgers. On-Premise continues to gain momentum with stable on ground scenario while off-premise trends remain steady," Aggarwal has said in his report.

"We remain positive on the structural story for Westlife given 1) sustained guidance of adding 200 stores in 3-4 years (35/40 in FY23) 2) increased traction on fried chicken yielding additional Rs10mn of AUV/store (Rs5mn earlier) 3) stronger start to stores in Tier2/3 vs metros with sales at par with older stores and 4) royalty reduction in FY23 and negotiation with parent for gradual increase in royalty beyond 5% after FY26. We estimate Sales CAGR of 26.6% over FY22-25 with an EPS of Rs8.3/Rs11.5/Rs15.0 in FY23/24/25. We maintain DCF based target price of Rs847 (unchanged). Buy for long term Gains given huge scope to scale up a strong brand with clear focus & vision," the report says.