Buy This Restaurant Stock For Potential Gains Of More Than 22%: Prabhudas Lilladher

Outlook of Westlife Development Ltd.

Through its fully owned subsidiary Hardcastle Locations Pvt Ltd, Westlife Development Limited (WDL) concentrates on opening and running McDonald's restaurants throughout West and South India.

Currently, the company oversees the management of 223 McCafé sites and 319 McDonald's restaurants throughout West and South India, including malls, high streets, shopping centres, and residential areas. Over 10,000 employees are working in the branches of the company.

Outlook of Westlife Development Ltd Stock

Westlife Development Ltd is a mid-cap company with over Rs. 10,879 Crores market capitalization. The stock is currently trading at the market price of Rs. 698, with an all-time high of Rs.755 and an all-time low of Rs. 402.

The Return On Equity and Return On Capital Employed for the stock are -1.88% and 3.50% over the five years of period. The stock gave over 40.91% returns over 3 months, 23.63% in one year, and an upside of 131.96% over 3 years.

Valuation Outlook of Westlife Development Ltd.

Regarding the estimates of valuation, the latest report of Prabhudas Lilladher mentioned, "We increase EPS estimates (1.0%/3.4% FY23/FY24 and introduce FY25 EPS estimates) and increase our DCF based target price to Rs847 (Rs781 earlier). Our recent management interaction reinforced our positive stance on the company, given
1) Plans to add 35-40 stores in FY23 and 200 stores by FY26.
2) Strong innovation pipeline across Burgers and Chicken.
3) Probability of staggering increase in royalty (4% in FY23, 4.5% in FY24, 5% in FY25/26) beyond FY26.
4) Sustained success of launches like Gourmet Burgers & Meals and Fried Chicken and 5) strong start to new stores in Tier2/3 with sales at par with older stores."

Buy Call Of Prabhudas Lilladher On Westlife Development Ltd

As mentioned in the latest report of Prabhudas Lilladher, "Growth momentum remains strong on the back of sustained growth in Dine in and Convenience channel (2x pre-COVID levels), positive response to Fried Chicken pilot in West (5-10 stores in Mumbai) and traction in Gourmet Burgers & Meal options. We believe input cost pressures have peaked out, and a 5% price increase from May 22 will aid margin expansion in the coming quarters. We estimate a Sales CAGR of 27.3% over FY22-25 with an EPS of Rs8.3/Rs11.5 in FY23/24, and we introduce FY25 EPS at Rs15. We assign a DCF-based target price of Rs847 (Rs781 earlier). Although WDL has gained 70% from May 22 lows, long-term prospects remain positive."

At the very start to summarize the whole report in one line, the report said, "Big Mac story has just begun: BUY."