Prabhudas Lilladher has given Buy recommendation for Westlife Development with a target price of Rs. 653 in its research report issued on May 18, 2022

Prabhudas Lilladher’s research report on Westlife Development

WDL posted encouraging numbers with SSSG of 23%, 42% sales growth of Convenience channel and 250bps EBIDTA margin expansion Pre IND AS despite Omicron impact in Jan22. We believe WDL’s menu innovations – Fried Chicken (South India), Gourmet Burgers, Meal options will continue to power growth in coming years. We remain positive on the long term story for Westlife and expect it to emerge stronger given 1) Renewed aggression with aim of adding ~200 stores in 3-4 years 2) Increased focus on fried chicken yielding additional Rs 5mn of AUV/store (mainly in South India) 3) Pilot of fried chicken in western markets and potential launch of gourmet burgers in south markets. 5) Fading impact of COVID will drive dine in and café sales which are margin accretive 6) Additional gains in convenience channel even in post covid scenario.

Outlook

We estimate Sales CAGR of 25.0% over FY22-24 with an EPS of Rs6.4 and Rs9.2 in FY23/24. We assign DCF based target price of Rs653 (Rs645 earlier). Buy for LT Gains given huge scope to scale up and strong brand.

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