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Prabhudas Lilladher Report
We cut FY25/26 EPS estimates by 36.1%/29.8% following decline of 6.7% in same-store sales growth, pressure on margins and benign growth outlook in H1 FY25. Sales were affected by sustained poor sentiments in some geographies (70-80 stores) led by external issues (Geopolitical), improvement is happening at a slower rate.
We expect Westlife Foodworld Ltd. to return to positive SSG by fag end of Q3 only, which along with higher overheads on new stores and accelerated store openings will affect margins and profitability in H1 FY25.
We note that sales/store/Qtr has declined to ~16 million from a peak of Rs 18 million and recovery in it is key for margin reversal. Westlife Foodworld does not have any inflationary pressures; however, reversal in demand trends might take a tad longer due to competitive pressures.
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