Westlife Foodworld Q2 Results Review - Healthy ADS Growth Drives The Earnings Beat: Motilal Oswal
Sales grew 48.5% YoY to Rs 5,724 mn (our estimate: Rs 5,203 mn). Same store sales growth stood at 40% YoY (our estimate: 25%).
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Motilal Oswal Report
Westlife Foodworld Ltd. reported a better than expected sales momentum in Q2 FY23. Even as gross margin was in line, operating leverage led to an 18% Ebtda beat from our expectation.
The management indicated a gradual improvement in gross margin going forward, led by a further 2% blended price increase in October 2022 and the return of the high margin McCafe business to pre-Covid levels.
While Westlife Foodworld’s prospects are improving, its medium term earnings growth can still be weaker than its peers, given:
the increase in royalty, and
the limited room to improve gross margin, with over 80% of its stores already having McCafe outlets.
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