Hold Westlife Foodworld: target of Rs 604: Prabhudas Capital

hold

Prabhudas Capital's research report on Westlife Foodworld

WFL reported SSG decline of 2.8% (vs. Ple: –1%) as demand softness persisted through Q2, driven by a continued decline in eating-out frequency. GM expanded to 276bps YoY, aided by supply chain efficiency. However, EBITDA margin contracted 184 bps YoY, impacted by higher employee costs (+131 bps) and elevated other expenses (+330 bps). The near-term outlook remains cautious, given 1) slower than expected demand recovery 2) aggressive store expansion and incremental brand investments 3) structurally lower eating-out frequency, which may take longer to normalize, and 4) continued underperformance in the southern markets.

Outlook

WFL’s is focusing on long term drivers like 1) innovations in Burger, chicken and Coffee combos and Mcsaver meals 2) store addition with guidance of 580-630 stores by CY27 (45/50 in FY26) 3) flexibility of format with relevance across Metros, Tier 1, Mid-tier towns and Highways. WFL trades at 23.2xFY28 Pre INDAS EV/EBIDTA. We cut DCF based target price to Rs604 (Rs 748 earlier). We believe demand traction in 3Q/4Q26 will determine profit growth and stock returns. Retain Hold.

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