This McDonald's Franchisee Stock Looks A Good Buy On Strong Financial Numbers

Westlife Development Limited, owner of Hardcastle Restaurants Pvt. Ltd, the master franchisee of McDonald's restaurants in West and South India has reported a good set of numbers for the quarter ending Dec 30, 2021. We believe with expansion plans and an array of plans for the future the stock of Westlife Development is a good stock to pick at the current price.

Good financial performance

Westlife Development Limited reported a strong quarter with solid performance across all operating metrics. The Company clocked an all-time high revenue of Rs 476.83 crores, a significant 46.7% jump YoY. This was driven by growth across both dine-in and convenience channels that grew by a solid 39% and 55% respectively. The Company's Same Store Sales Growth for the quarter stood at 44% YoY.

Despite inflationary pressures, Westlife Development Limited Company showed good gross margin of 66.4% - an improvement of 48.2% YoY. The strong topline ensured a robust 60.3% YoY jump in the Restaurant Operating Margins that stood at 22.6%.

The company also reported a high EBITDA of Rs 83.62 crores, a 61.0% increment YoY, taking the EBITDA margin to a new high. As a result, the Company clocked an all-time high net profits of Rs 20.82 crores.

Expansion plans to drive growth

Westlife Development has also has aggressive expansion plan. In the Sept-December quarter, the company added 8 new stores taking the total store count to 316 restaurants across 44 cities.

Close to 80% of its restaurants have McCafé now while over 100 of them are ‘Experience of The Future' (EOTF) restaurants.

In October 2021, the Company announced that it will invest Rs 800-1000 crores over the next 3-5 years to take its restaurant count to over 500, convert all its restaurants to EOTF, improve its digital prowess, and develop cutting-edge menus.

With this new stronger baseline, Westlife Development Limited is now ready to accelerate its network, taking its overall footprint to over 500 restaurants over the next 3-5 years. Its expansion strategy will also be aligned to its omni-channel strategy with a robust portfolio of experience of the future stores, drive-thrus and stores with separate take-out windows.

We believe with a good set of quarterly numbers and expansion plans for the future, the stock is a good buy at the current levels.

The stock of Westlife Development was last seen trading at Rs 499 on the BSE.

Disclaimer:

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and his family do not hold shares of West life Devlopment. Investors should exercise caution on account of heightened volatility in the markets currently.