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%).

<div class="paragraphs"><p>Close view of McDonalds french fries. (Source: Unsplash)</p></div>
Close view of McDonalds french fries. (Source: Unsplash)

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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:

  1. the increase in royalty, and

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

Click on the attachment to read the full report:

Motilal Oswal Westlife Foodworld Q2FY23 Results Review.pdf


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