ICICI Securitie's research report on Westlife Foodworld
Revenue was flat YoY (+10% QoQ) while SSSG declined 6.7% YoY impacted by general slowdown in consumption and subdued on-premise sales. Revenue growth in on-premise and off-premise businesses stood at -3%, 6% YoY, respectively. Revenue share from off-premise business remains stable at 42%, while that from digital sale stood at 69% (up 8% YoY). TTM revenue per store declined 8% YoY to INR 61.3 led by challenging consumption and demand environment. Everyday McSaver Meals continues to drive footfall and gain market share. It has partnered with Chef Sanjeev Kapoor for driving Real Food, Real Good initiative.
Outlook
Westlife Foodworld’s (Westlife) SSSG performance has worsened to -6.7% YoY (vs -5% YoY in Q4FY24). This was due to (1) underperformance in on-premise business (58% revenue share), while off-premise channel witnessed stable SSSG. (2) Aggressive competitive pressure (free delivery and lower price point offering in the meal segment), in our view. Positively, business continues to recover in the affected store (due to external issues – 30% of total stores) and it has also roped in Chef Sanjeev Kapoor for driving Real Food, Real Good initiative which should help in brand building. Gross margin improvement (20bps YoY) was comforting while negative operating leverage led to sharp contraction in operating EBITDA margin (-388bps YoY). Positively, it has retained its earlier guidance on retail expansion (to add 45- 50 stores in FY25) and operating profit margin (at 18-20% in medium term). Downgrade to HOLD (from Add).
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