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Buy Call: Multibagger Mid Cap Hospitality Stock Outperformed QSR Sector, Edelweiss Says Invest

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Edelweiss has recommended investors to invest in leading Tourism & Hospitality sector stock, Westlife Foodworld Ltd (WFL) with target price of Rs 875 apiece. If you buy Westlife Foodworld Ltd at current market price of Rs 719 apiece, you can fetch 22% return.

 

According to the latest report of Edelweiss, WFL targets to (1) open 250-300 stores by CY27 to reach 580-630 stores; (2) increase revenue at a ~15% CAGR to INR4,000-4,500cr, supported by high single-digit SSSG; and (3) expand EBITDA margin by 300-350bps to 18-20%. WFL outperformed the QSR (Quick Service Restaurant) sector over the past two quarters, and is expected to continue outperforming for at least the next one year. Check key details below:

1. Westlife Foodworld Ltd Stock Outlook & Return

1. Westlife Foodworld Ltd Stock Outlook & Return

The last trading price of the stock is Rs 719 apiece with 52-week high at Rs 811 apiece and 52-week low at Rs 402 apiece, respectively. The company has a market capitalisation of Rs 11,221 crore.

The stock has given multibagger returns to investors with last 5-years return at 107%, 3-years return at 94%, and 1-year return at 30%. The stock has jumped 12% in last 3-months. In last 6-months, it has jumped 56%.

2. Core Strategies
 

2. Core Strategies

WFL laid four core strategies to achieve its targets highlighted for Vision 2027 that are (1) Meals strategy, (2) Omni-channel strategy, (3) Faster network expansion, and (4) Performance improvement (operational efficiency).

Under meal strategy, WFL plans to double down its offerings on meals (lunch and dinner), as mealtime will account for ~67% of India's dine-out spend in the next five years as against ~27% for snacks and ~6% for breakfast.

Under omni-channel strategy, WFL plans to integrate various channels and touchpoints (dine-in, delivery, takeaway, etc.) for a superior customer experience. Under faster network expansion plan, it plans to double its annual store opening run-rate to 40-55 to reach 580-630 stores by 2027.

And, under performance improvement strategy, WFL targets to improve its operating margin by 300-350bps to 18-20% EBITDA margin by CY27.

3. Valuation

3. Valuation

According to the analyst, "With management's focus to increase revenue per store and aggressively increasing its store footprint, supported by improvement in operating margins, we reiterate our BUY recommendation on WFL with a TP of INR875/share, valuing the stock at 25x FY25E EV/EBITDA."

4. About Westlife Foodworld

4. About Westlife Foodworld

Westlife Foodworld Limited (WFL), formerly Westlife Development Limited, is one of the fastest-growing players in India's quick service restaurant (QSR) sector. It focuses on establishing and operating McDonald's restaurants across West and South India, through its wholly-owned subsidiary Hardcastle Restaurants Pvt. Ltd. (HRPL).

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Edelweiss. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.

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