Broker’s Call: Westlife Food (Reduce)
ICICI Securities
Westlife Foodworld reported an 11.9% year-on-year increase in consolidated revenue to ₹740 crore in Q1FY27, driven by growth in guest counts across markets and the success of Everyday Value offerings. Performance was consistent across on-premise and off-premise sales, with each segment growing by 12% and 11%, respectively, thanks to the continued strength of the McDelivery platform.
Digital channels contributed about 74% of the company's revenue. However, the restaurant operating margin declined by 128 basis points to 18.6%, primarily due to input cost inflation. Despite this, EBITDA grew by 10.8% to a margin of 12.9%, thanks to disciplined cost management and operating leverage. Management expects inflationary pressures to ease and expects gross margins to stay above 67% in the near-to-medium term.
The company added five new gross restaurants in Q1FY27, achieving 100% penetration for McCafé and 26% for Drive-thru. Westlife is on track to add 60+ restaurants in FY27, aiming to hit its target of 580-630 stores by December 2027. The report largely maintains its estimates, projecting an 11% CAGR for revenue and an 18% CAGR for EBITDA from FY26 to FY28E. The recommendation remains to "Maintain Reduce" with a DCF-based unchanged target price of ₹450.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
