PL First Cut - Westlife Foodworld 1QFY24

PL First Cut – Westlife Foodworld 1QFY24: Amnish Aggarwal – Head of Research - Prabhudas Lilladher Pvt Ltd

Westlife Foodworld 1QFY24: Dine-in trends remain strong; margins improve YoY

(CMP: Rs913|Accumulate)

> Revenues grew by 14.2% YoY to Rs6.1bn (PLe: Rs6.2bn). On-Premise/Off-Premise channels grew by 18%/9% YoY.

> SSSG at 7% driven by increased guest counts.

> Gross margins expanded by 235bps YoY/-135bps QoQ to 70.6% (Ple: 71.5%).

> EBITDA grew by 19.4% YoY to Rs1042mn (PLe: Rs1030mn); Margins expanded by 73bps YoY/101bps QoQ to 16.9% (PLe:16.5%).

> Adjusted PAT grew by 22.3% YoY to Rs288mn (PLe: Rs287mn); Pre-IND AS PAT at Rs368mn.

> Declared interim dividend of Rs3.45/share.

Other Updates

> Targets 40-45 new restaurants in FY24

> Digital sales improved to ~64% led by 3x growth in Self-Ordering Kiosks

> The company now has 224 Experience of Future stores (~72% of restaurants) & 315 McCafés (~87% of restaurants)

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Sales in Metros grew ahead of Non-Metro towns on YoY basis. However, on pre COVID base, Non-Metro towns grew much faster. The company saw strong growth across dine-in due to an increase in guest count. Burger category remains insulated from weakness seen in the pizza category. Menu innovations such as Piri Piri McSpicy range and McSaver meals were launched during the quarter which added to its existing portfolio. Higher pace of store additions in FY24 bodes well to increase throughput and boost profitability in coming years. We have an Accumulate rating on the stock with a target price of Rs800.

Stock trades at 71.8x FY25 EPS.