Westlife Foodworld Q4 Results Review - Muted Performance; Maintain Sell: Dolat Capital

Dolat Capital Report

Westlife Foodworld Ltd.’s Q4 FY24 results came below our estimate. The company reported 1.1% YoY revenue growth with 5% same-store sales growth decline in Q4 FY24 on a base of 14% growth (On four-year compound annual growth rate basis, 13.7% revenue CAGR).

The company opened 17 net new stores during Q4 to take the total store count to 397. Westlife Foodworld re-affirmed its target to add 45-50 stores in FY25E and to take the store count to 580-630 by FY27E.

On-Premise business de-grew 2% YoY, while off-Premise business grew 8% YoY in Q4. Average annualised sales per store decreased by 5% on a trailing twelve months basis and stood at Rs 63.0 million in Q4 FY24.

We have downward revised our FY25/26E Ebitda by 20.6/15.8% to factor in significant fall in SSSG and lower operating leverage in the ensuing quarters. Though Westlife Foodworld has an attractive menu offering targeted towards millennials and strong brand extensions like Mc Café, we believe that the company will have to battle high SSSG base and subdued demand. We have changed our valuation methodology from PE to enterprise value/Ebitda to capture core value of the business.

Valuing the stock at 26 times FY26E EV/Ebitda, we arrive at a target price of Rs 764. Maintain ‘Sell’ rating.

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