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Dolat Capital Report
Westlife Foodworld Ltd.'s revenue and Ebitda came inline with estimate. The company delivered healthy revenue growth of 28.2% with strong same-stores sales growth growth of 20% in Q3 FY23 on a base of 44%. (On three-year compound annual growth rate basis, 12% revenue CAGR).
The company opened six new stores and 14 new Mc Cafe's during Q3 to take the total store count to 341. Westlife Foodworld would maintain the store addition pace with 35-40 stores in FY23E and would take store count to 580-630 by FY27.
Despite high inflation gross margin expanded by 50 bps led by improved product mix. Further, 150 bps decline in other expenses was partially offset by 190 bps increase in employee cost resulted in 10 bps Ebitda margin expansion. We believe that the margins would improve gradually from current levels.
We strongly believe that the domestic quick service restaurant market has ample headroom for growth given its underpenetrated nature versus other Asia Pacific nations like China.
Given that Westlife Foodworld has an attractive menu offerings targeted towards millennials and strong brand extensions like Mc Cafe, we believe that it would hold an upper hand against the competition.
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