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Westlife Foodworld, formerly known as Westlife Development Ltd (Westlife), surged 6 per cent to hit a record high of Rs 993.2 per share on the BSE in Thursday’s intra-day trade.
In the past two days, the stock of this restaurant company has rallied 10 per cent on healthy business outlook. It has surpassed its previous high of Rs 967.95 apiece, touched on July 31, 2023.
Westlife Foodworld is principally engaged in putting up and operating Quick Service Restaurants (QSR) in India through its wholly-owned subsidiary Hardcastle Restaurants Private Limited (HRPL). The company operates a chain of McDonald’s restaurants in the western and southern parts of India, having a master franchisee relationship with McDonald’s Corporation USA, through the latter’s subsidiary.
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Westlife’s service offering has branched into dine-in, drivethru, on-the-go, takeaway, and McDelivery (online ordering through the app and website), enhancing its omni-channel convenience and accessibility.
As of June 2023, Westlife operates 361 restaurants across 58 cities, with four new stores opened in Q1. The company plans to add 40-45 new stores in FY24 and reach between 580-630 stores by 2027.
From 2022 to 2027, the Indian food services sector is expected to grow at a 10.4 per cent compounded annual growth rate (CAGR) and reach Rs 6.6 trillion. Furthermore, during the period of 2022-2027, QSR in India is expected to grow faster than the overall market, growing at approximately 13 per cent CAGR.
Over the last two years, the management said that the annual spending of middleclass households on fast food restaurants, from tier-II and tier-III cities, has more than doubled from Rs 2,500 to Rs 5,400.
"The market size of the QSR industry in tier II and tier III towns was valued at $134.3 million. The widening presence of major food chains in smaller cities, catering to a younger audience and an increase in disposable incomes will be tailwinds for the Indian QSR sector," the company added in its FY23 annual report.
Meanwhile, Westlife had reported 14 per cent revenue growth in June quarter (Q1FY24) led by 7 per cent Same Store Sales Growth (SSSG), with the remaining through new store additions.
Despite weak consumption trends, the company expects to continue outperformance on the back of strengthening of meals (Chicken/Gourmet/Extravalue-meal at Rs 179), new product innovation, and omni-channel investments. For the medium term, Westlife maintained its outlook of a high-single-digit same store sales growth (SSSG).
Analysts at Emkay Global Financial Services shared a ‘buy’ rating on the stock with a 12-month target price of Rs 1,035 per share.
“In our view, Westlife will continue outperforming peers, with strengthening of the meal platform, snacking leadership and improved touch-points via omni-channel investments. Refreshed dividend policy of >25 per cent payouts should add to the RoE improvement trajectory,” the brokerage firm said.
