Hold Westlife Foodworld; target of Rs 778: Prabhudas Lilladher

Prabhudas Lilladher's research report on Westlife Foodworld

WFL outlook remains cautious in near term given 1) TTM Average sales/store declined 7.1% YoY and it was flattish QoQ despite festive season and 2) muted urban demand outlook given high food inflation. Sales continue to remain affected by poor sentiments sustained in some geographies (70-80 stores) led by Geopolitical issues, although the worst seems over. We expect WFL to maintain a positive SSG in coming quarters at a low base, however higher overheads on new stores and accelerated store openings will curtail significant margin expansion in the near term. RM remains elevated, however operational efficiencies along with 0.5% price hike (3Q25) will likely offset the impact of input cost inflation.

Outlook

Long term growth drivers are intact with focus on 1) Burger, chicken and Coffee combos and Mcsaver meals 2) guidance of 580-630 stores by CY27 (45/50 in FY25) 2) menu innovations in café & value burgers with limited edition launches and offers from time to time 3) increased traction in chicken offerings and 4) flexibility of format with relevance across Metros, Tier 1, Mid-tier towns and Highways. We cut DCF based target price to Rs778 (Rs817 earlier). Retain Hold.

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