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Dolat Capital Report
Westlife Foodworld Ltd. delivered healthy revenue growth of 48.5% with strong same-store sales growth growth of 40% in Q2 FY23 on a base of 84%. On three-year compound annual growth rate basis, the company reported 13% revenue CAGR versus 9% reported by Jubilant FoodWorks Ltd.
Westlife Foodworld opened six new stores and seven new Mc Cafe's during Q2 to take the total store count to 337. The company plans improve the store addition pace in the ensuing quarters. It would add 35-40 stores in FY23E.
Despite high inflation gross margin expanded by 70 bps led by improved product mix. Further, 20/420 bps decline in employee/other expenses helped expand Ebitda margin by 520 bps. 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 McCafe, we believe that it would hold an upper hand against the competition.
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