In its research report dated October 5, 2023, Prabhudas Lilladher has retained a Hold rating on Westlife Foodworld and set a target price of Rs 958.
The report acknowledges that while there has been some softening in demand recently due to consumer cutbacks in spending amidst higher food inflation, Westlife Foodworld (WFL) has managed to defy this trend. The company has shown resilience and sustained growth, driven by factors such as the success of the McSaver value meal, consistent traction in the chicken business in the southern region, and the ability to offer an all-day menu across breakfast, snacks, and meals. Additionally, WFL is focusing on revamping McCafe with expanded food options and accelerating innovations in its core segments of burgers, chicken, and coffee in the second half of 2024, which is expected to maintain traction during the festival season.
In terms of financial estimates, the report has reduced FY24/25 EPS by 8.4% and 7.4%, respectively. However, the long-term growth story of WFL is seen positively due to its brand moat and significant potential for increased penetration.
Looking ahead, Prabhudas Lilladher estimates a Sales/EPS compound annual growth rate (CAGR) of 18.2% and 30.6% over the period from FY23 to FY26. The report assigns a target price of Rs 958 based on a discounted cash flow (DCF) analysis, compared to the earlier target of Rs 932. The rating remains Hold, with a positive bias in the long term.
Investors are encouraged to consider this research report when evaluating Westlife Foodworld as an investment option, taking into account the mentioned factors and the company’s growth potential in the food industry.