Prabhudas Lilladher's research report on Westlife Development
We increase EPS estimates (1.0%/3.4% FY23/FY24 and introduce FY25 EPS estimates) and increase our DCF based target price to Rs847 (Rs781 earlier). Our recent management interaction reinforced our positive stance on the company given 1) Plans to add 35-40 stores in FY23 and 200 stores by FY26 2) Strong innovation pipeline across Burgers and Chicken 3) Probability of staggered increase in royalty (4% in FY23, 4.5% in FY24, 5% in FY25/26) beyond FY26 4) Sustained success of launches like Gourmet Burgers & Meals and Fried Chicken and 5) strong start to new stores in Tier2/3 with sales at par with older stores. Growth momentum remains strong on the back of sustained growth in Dine in and Convenience channel (2x pre-COVID levels), positive response to Fried Chicken pilot in West (5-10 stores in Mumbai) and traction in Gourmet Burgers & Meal options. We believe input cost pressures have peaked out and 5% price increase from May22 will aid margin expansion in coming quarters. We estimate Sales CAGR of 27.3% over FY22-25 with an EPS of Rs8.3/Rs11.5 in FY23/24 and we introduce FY25 EPS at Rs15.
We assign DCF based target price of Rs847 (Rs781 earlier). Although WDL has gained 70% from May 22 lows, long term prospects remain positive. Retain Buy.
At 16:01 hrs Westlife Development was quoting at Rs 678.70, down Rs 7.60, or 1.11 percent.
It has touched an intraday high of Rs 708.30 and an intraday low of Rs 672.05.
It was trading with volumes of 10,476 shares, compared to its thirty day average of 22,308 shares, a decrease of -53.04 percent.
In the previous trading session, the share closed down 1.37 percent or Rs 9.50 at Rs 686.30.
The share touched its 52-week high Rs 755.00 and 52-week low Rs 402.05 on 26 September, 2022 and 12 May, 2022, respectively.
Currently, it is trading 10.11 percent below its 52-week high and 68.81 percent above its 52-week low.
Market capitalisation stands at Rs 10,583.39 crore.
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