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All operating parameters for Westlife Development Ltd. – same stores sales growth, sales, gross margin, and Ebitda – were in line.
Unusually higher other income and lower than expected interest costs led to the profit after tax beat.
The management said that dine-in is back to pre-Covid levels and yet the convenience platform is doing much better than pre-Covid levels.
The opportunity for quick service restaurants in India is attractive and has enhanced significantly post-Covid, as elaborated in our thematic note in December 2021.
While Westlife Development’s prospects are improving, earnings growth over the next four to five years can be weaker than its peers, given:
the scheduled increase in the royalty rate to 8% in FY27, and
limited room to improve gross margin, with 80% of its stores already having McCafe outlets.
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