Emkay Global Financial's research report on Westlife Development
WLDL delivered 3 rd consecutive quarter of 20%+ beat to our/street EBITDA estimates. WLDL reported a 3Y CAGR of 12%, led by an impressive 9% CAGR in rev/store vs. 6% estimates. Operating leverage helped offset the RM hike, leading to 120bps margin beat. Dine-in sales picked up strongly with 3Y CAGR of 4%, along-with sustained convenience sales (29% CAGR). WLDL maintained its target of adding 35 stores in FY23 and 200+ in the next 3-4 years. Expects multi-occasion play to drive relatively stronger SSG of 8%+. EBITDA margin at 13% was ~500bps higher vs. Q1FY20. Full benefit of price hikes and softening of commodities should drive further gains. WLDL now expects a gradual royalty increase vs. a 300bps step increase to 8% in FY27 from 5% in FY26.
Outlook
We have increased FY24/FY25 EBITDA estimates by 8-11%, led by strong Q1 and assuring margin commentary. WLDL shall benefit more upon unlocking and consistent performance should boost investor confidence. We maintain Buy with a revised TP of Rs720 (based on 27x Sep’24E EBITDA vs. 28x earlier). Multiple cut is led by a 3M rollover.
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