Neutral Westlife Foodworld; target of Rs 800: Motilal Oswal

Motilal Oswal's research report on Westlife Foodworld

We recently hosted Westlife Foodworld’s (WESTLIFE) management at our Ideation Conference to gain insights into the company's current business environment and future plans. Over the past six months, the company has experienced a stable demand environment, with a slight improvement in 4QFY25, however this is seasonally weak quarter. A favorable base is further contributing to an improved growth print. Consumer sentiment is expected to pick up gradually from late 1QFY26, driven by potential interest rate cuts and fiscal measures implemented in Budget 2025. Regionally, recovery remains stronger in the west, while the south, particularly Kerala and Hyderabad, is witnessing a gradual improvement. The company continues to focus on menu innovation and value-oriented offerings to attract customers. It is strengthening its fried chicken portfolio in South India, aligning with local consumer preferences. Store expansion remains a key focus, with plans to open 45 new stores in FY25 and a target of 580-600 stores by Dec’27. As of Dec’24, the company opened 25 stores YTD, bringing the total count to 421, with drive-thrus accounting for 22% (93 restaurants). McCafé is emerging as a key growth driver, contributing 12-13% to Average Daily Sales (ADS). It has the potential to reach 18-20%, benefiting from McDonald's existing infrastructure.

Outlook

We have recently upgraded our view on the QSR universe from cautious to positive following the tax relief announced in Budget 2025 for the middle-class income group. We remain watchful for ADS recovery as it could swiftly improve unit economics. We reiterate our Neutral rating on the stock with a TP of INR800, based on 35x FY27E EV/EBITDA (pre-IND-AS).

For all recommendations report, click here