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The Stock Of McDonald's Operator Could Rise; PL Places “Buy” Tag On Shares
Brokerage firm Prabhudas Lilladher feels that the Westlife Foodworld, the McDonald's operator saw 3QFY23 showing momentum continues. The brokerage has placed a "buy" call on the stock with a price target of Rs 854.
Revenues rise for Westlife Foodworld
According to Prabudas Lilladher, revenues grew by 28.2% YoY to Rs6.1bn (PLe: Rs 6.1bn). On-Premise/Off-Premise channels grew by 42%/12% YoY and > SSSG at 20%.
According to the brokerage there were 6 store additions, taking the same to a total store count of 341 restaurants with 288 McCafe's.
Gross margins expand
Here are some of the other highlights of Westlife Foodworld:
- Gross margins expanded by 52bps YoY/141bps QoQ to 66.9% (Ple: 66.4%)
- EBITDA grew by 28.8% YoY to Rs1022mn (PLe: Rs1082mn); Margins expanded by 7bps YoY to 16.7% (PLe:17.8%)
- Restaurant EBITDA margins at 23.8%.
- Adjusted PAT grew by 74.7% YoY to Rs364mn (PLe: Rs367mn); Pre-IND AS PAT at Rs363mn.
Other Updates
- Highest ever monthly revenues in Oct/Dec with Rs 2bn+.
- McDelivery platform continued to outperform with a rising user base.
- The company now has 205 Experience of Future stores (~60% of restaurants).
View
The company saw broad based growth across channels especially dine-in due to higher footfalls. Menu innovations such as McCheese range and KITKAT product range was well received by customers. "Price hikes taken in the prior quarter saw flowed through which enabled strong gross margin expansion in 3Q. The benefits of accelerated store expansion plans and rising throughput will boost profitability in coming years. We have a BUY rating on the stock with a target price of Rs 854. Stock currently trades at 63.7x/48.5x FY24/FY25 EPS," the brokerage has said.
Disclaimer
The above-mentioned information is purely informational and is taken from the report of Prabhudas Lilladher. Greynium Information Technologies, the Author and the 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.
