Westlife Foodworld - Outperformance Likely To Continue: Nirmal Bang

Nirmal Bang Report

We recently hosted the management of Westlife Foodworld Ltd. to get an overall business update. Key highlights from the conference:

1. High density of highway stores and proposition offered by the company have been a bulwark for Westlife Foodworld in the current uncertain environment, leading to better performance compared to peers.

2. While the unorganised market in food services has gained back some share post the Covid shock, the proposition offered by the McDonald’s brand has served Westlife Foodworld well to curb this impact relative to others.

3. Incremental expansion in South India and tier-II cities with the Chicken offering has led to narrowing of average unit volume between the West and the South markets.

4. Outlook on the cost front is now better compared to the preceding quarters. Westlife Foodworld is not planning any price hikes currently but lower end of the average 3-5% price increase could happen in FY24 if required.

5. The company expects the beverage part of the business (McCafe) to see significant growth in future.

The stock is now trading at ~33 times/28 times FY24E/FY25E pre-Ind Accounting Standard Ebitda.

Westlife Foodworld has been our top pick in the consumer discretionary space and has yielded relatively healthy returns, backed by strong financial performance on a consistent basis.

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