Hold Westlife Foodworld; target of Rs 958: Prabhudas Lilladher

Prabhudas Lilladher's research report on Westlife Foodworld

We cut FY24/25 EPS by 8.4/7.4% respectively although we remain positive on long-term growth story given brand moat and huge scope to increase penetration. WFL has bucked the trend of demand slowdown from the past few quarters, however there has been some softening in demand off late as consumers cut back on spending amidst higher food inflation. WFL is on a path of sustained growth with 1) success of Mcsaver value meal 2) sustained traction in chicken business in south and 3) ability to provide all day menu across breakfast, snack and meals. WFL is looking at makeover of McCafe with more food options and accelerated innovations in its core segments of Burgers, Chicken and coffee in 2H24 which is expected to provide sustained traction in festival season.

Outlook

We estimate Sales/EPS CAGR of 18.2%/30.6% over FY23-26. We assign DCF based target price of Rs958 (Rs932 earlier) with Hold rating (Accumulate earlier) with positive bias in LT.