Westlife Foodworld's management has continued its aggression in opening drive-thrus; seven of 15 new stores were opened in the drive-thru format.
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HDFC Securities Institutional Equities
Westlife Foodworld Ltd.'s Q3 FY25 results were marginally ahead of our estimates due to a lower-than-expected royalty rate. However, operational numbers were far weaker, with 3% same-store sales growth. Notably, SSSG was subdued despite a favorable base (-9%) and management's aggression on the value meal platform.
We maintain a Reduce rating with a target price of Rs 680 (30x FY27 Pre-IND-AS EV/Ebitda) as we expect it to deliver revenue and Ebitda CAGRs of 11% over FY24-27, driven by-
weak macros,
increased competitive intensity as more nimble and new-age brands gain access to capital, along with Burger King adopting an aggressive pricing strategy to grab market share,
external headwinds such as geopolitical turmoil leading to boycotts of certain American brands, and
the increase in the royalty rate from 4.5% in FY24 to 5.5% in FY27.
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