Neutral Westlife Foodworld; target of Rs 800: Motilal Oswal

Motilal Oswal's research report on Westlife Foodworld

WLDL reported a healthy and broadly in-line operating performance in 3QFY23. While SSSG was better than our expectation, sales, gross profit and EBITDA were in line. Management has maintained its store expansion target of 35-40 for FY23 despite adding only 15 stores (net) in 9MFY23.  WLDL’s medium- to long-term earnings growth prospects are constrained by an increase in royalty and limited scope for gross margin improvement, with over 80% of its stores already having McCafé outlets. We maintain our Neutral rating.

Outlook

from current levels, and 3) limited incremental gross margin levers. Our valuation at 28x pre-Ind AS FY25E EV/EBITDA leads to a TP of INR800.

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