Buy Westlife Development; target of Rs 600: Emkay Global Financial
Emkay Global Financial is bullish on Westlife Development has recommended buy rating on the stock with a target price of Rs 600 in its research report dated March 17, 2021.
March 18, 2021 / 03:27 PM IST
Emkay Global Financial's report on Westlife Development
Our bullish investment thesis on Westlife Development (WLDL) rests on three pillars: 1) Superior unit economics - about 30-40% higher revenue per store - relative to peers; supported by value pricing and strategies aimed at increasing in-store visits and offering complementing menus. Recent initiatives on digital could provide a further fillip. 2) Comparison with Domino's highlights a 3x store roll-out potential - offering a long visibility into penetration-led growth. We expect mid-teen revenue growth for several years with an upside risk. 3) Our relative analysis of a peer at a similar scale throws a strong case for a 500bps upside in EBDITA margins. Higher unit economics should lead to industry-leading ROEs as high upfront overheads get more corralled with scale. The pandemic has already reset the cost curve lower, commensurate with a 20% lower revenue.
We are initiating coverage with a Buy rating and a Jun'22E TP of Rs600, based on 32x Jun-23E EV/EBITDA (backed by our long-term DCF analysis).
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