ECONOMY

Westlife Development Q4 Review – In Line, Fair Valuations Limit The Upside: Motilal Oswal

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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:

  1. the scheduled increase in the royalty rate to 8% in FY27, and

  2. limited room to improve gross margin, with 80% of its stores already having McCafe outlets.

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