INITIATING COVERAGE March 17, 2024

March 17, 2024

INITIATING COVERAGE | Sector: Consumer Discretionary (QSR)

Westlife Foodworld Ltd Reco : BUY

CMP : Rs 740

Decent medium-term opportunity Target Price : Rs 940

Potential
: +27%
We initiate coverage on Westlife Foodworld Ltd (WFL) with BUY rating based on the Return
following arguments: (1) robust market opportunity (2) continued improvement in
Average Unit Volume (AUV), albeit at a lower rate than the sharp growth seen in last Stock data (as on Mar 15, 2024)
7 years (3) growing momentum of store expansion (4) earnings likely to grow at >60%
Nifty 22,023
over FY24E-26E (~17% over FY23-FY26E) with industry leading-SSSG (5) Despite 52 Week h/l (Rs) 1025 / 658
near-term overhang, we reckon industry & WFL will emerge stronger. Price correction Market cap (Rs/USD mn) 115065 / 1388
provides decent entry point for medium-term horizon. Outstanding Shares (mn) 155
6m Avg t/o (Rs mn): 154
Robust Foodservice market opportunity; execution continues to be key
Div yield (%): 0.4
Our recent interations with industry participants (IFF Dec’23 & FCIC Feb’24) does hint Bloomberg code: WESTLIFE IN
at near-term demand pain atleast till 1QFY25; nevertheless, it also makes us positive NSE code: WESTLIFE
on the long-term prospects of India Foodservice market, which is expected to grow by
Stock performance
11.3% CAGR over 2023-2026. Shift from unorganized market (>65% of India
Foodservice market), will be the biggest driver. While still insignificant, QSR is expected WESTLIFE Nifty
150
to grow the fastest within the organized segment over the next few years on the back 130
of widening reach in smaller cities and the target market characterised by a younger
110
demographic seeking covenience. WFL’s adressable population (West & South of India)
is close to +520mn (~240 large towns) across 11 States/UTs constituting ~55% of GDP. 90

Remarkable AUV growth over last 7 years; it still has legs 70

Mar-23 Jul-23 Nov-23
Within listed QSR companies, WFL has outperformed the market on Same-Store Sales
1M 3M 1Y
growth (SSSG) in last few years. WFL’s Avearge Sales Per Store/ Average Unit Volumes
Absolute return -10.3% -13.0% 7.6%
(AUV) have vastly improved over last 7 years esp. through Delivery channel. The
Combos & Meals strategy has also played a key role. WFL now aims at scaling to Rs70- Shareholding pattern (As of Dec’23 end)
75mn level over medium-term (Rs65mn in FY23). Beside conducive factors like growing Promoter 56.2%
preference for meals, premiumization of burgers, scaling of fried chicken, improving FII+DII 34.5%
McCafe beverage mix within stores, and focus on Drive-Thrus (DTs) additions, Desserts Others 9.0%
should boost growth over long term. Considering (1) India’s AUV & Eating-out
frequency vs other countries, (2) AUV of top 10% of stores vs System and (3) WFL’s Financial Summary (post IND-AS 116)
(Rs mn) FY24E FY25E FY26E
global portfolio offerings, we foresee bright prospects for further AUV improvement.
Revenue 23,692 27,702 31,719
Tier 1 and smaller towns: next frontier for store growth YoY Growth (%) 4.0 16.9 14.5
SSSG (%) -2.2 10.0 8.0
We believe, WFL has followed a disciplined approach of store expansion over the years
EBIDTA 3,749 4,819 5,640
and have consistently met targets. Management now intends to slightly up their annual
Margins (%) 15.8 17.4 17.8
store expansion rate to 40-50 stores (from 25-30 earlier) to reach 580-630 restaurants Recurring PAT 672 1,438 1,930
by 2027, with focus on South India market, Smaller towns and Drive Thrus. Despite EPS 4.7 9.2 12.4
near-term demand slowdown, pace of expansion is likely to stay put (on track to add YoY Growth (%) -39.4 96.1 34.2
40–45 stores in FY24), given mounting competitive intensity. ROCE (%) 23.5 27.9 27.8
ROE (%) 12.2 20.4 22.1
WFL offers SSSG driven earnings growth P/E (x) 157.4 80.3 59.8
We envision ~9% SSSG CAGR over FY24E-26E, ~5.1% over FY23-26E. Further, EV/EBITDA (x) 30.8 24.0 20.5
aggressive store expansion (200+ new restaurants coming up in next 3-4 years, taking
base to 500+ stores with 50-60% store openings in small and emerging towns) should
help achieve ~16% revenue CAGR over FY24E-26E, ~11.9% over FY23-26E. Margin
profile is also improving as AUV has crossed the Rs60mn+ mark, ensuring favorable
operating leverage. Cost savings and consistent but modest gross margin improvement
(led by stable input costs and mix+pricing) will support EBITDA margin expansion
(building ~200bps expansion over FY24E-26E).
Initiate coverage with a BUY rating, target price of Rs940
WFL now has a dividend policy in place (as near as possible to 25% of PAT) subject to
need for growth capital, positive cash flow, and other parameteres. Improving return VISHAL PUNMIYA
Lead Analyst
ratios command relatively better valuation than peers. We assign a target multiple of
~26x on FY26 EV/EBITDA, at a target price (TP) of Rs940 and BUY rating. We believe vishal.punmiya@ysil.in

near-term sectoral demand pain and company-specific overhang translates into a

decent medium-term investment (~14% CAGR return over next 3 years).

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 1
 Westlife Foodworld Ltd

WESTLIFE FOODWORLD LTD. (WFL)

 Westlife Foodworld (WFL) formerly known as Westlife Development Ltd (WDL), focuses on
setting up and operating Quick Service Restaurants (QSR) in India through its subsidiary
Hardcastle Restaurants Pvt. Ltd. (HRPL). The Company operates a chain of McDonald’s
restaurants in West and South India having a master franchisee relationship with McDonald’s
Corporation USA (largest MNC food chain globally), through the latter’s subsidiary.
 HRPL has been a franchisee in the region since its inception in 1996. It is present in 11 states
& UT’s across ~240 large towns covering +520mn population (~55% of GDP). HRPL serves
over 200mn customers, annually, at its 380 (as of December, 2023) McDonald’s restaurants
across 62 cities in the states of Telangana, Gujarat, Karnataka, Maharashtra, Tamil Nadu,
Kerala, Chhattisgarh, Andhra Pradesh, Goa and parts of Madhya Pradesh and Union Territory
of Puducherry. West India contributes around 60% of the total stores. It provides
employment to 11,596 permanent employees (as on FY23) with ~34% female employees.

Exhibit 1: WFL is present in 11 states & UT’s across ~240 large towns covering
+520mn population (~55% of GDP)

Source: Company, YES Sec

Exhibit 2: McDonalds (W&S) stores stood at 380 across Exhibit 3: Along with standalone and mall stores, WFL
62 cities at the end of 3QFY24 has decent mix of drive-thru asset and McCafés

McD (W&S) Store Count No. of cities No. of EOTF stores McCafés No. of Drive-thrus
400 75
62 400
342
56 350
60 311
300 47 275
43 300 262
41 42
45 250 220
200 200
30
150 118
100 100 64 68 73
15
50
296 319 305 326 357 380
0 0 0
FY19 FY20 FY21 FY22 FY23 9MFY24 FY22 FY23 9MFY24

Source: Company, YES Sec Source: Company, YES Sec; EOTF= Experience Of The Future

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 2
 Westlife Foodworld Ltd

 While McDonalds competes directly into the burger category in India, it does have other
categories (Chicken, Wraps, Sides, Coffee, Desserts, Shakes, Smoothies & Coolers) to offer
to various age groups and thereby covering a wider addressable market to drive long term
growth.
 McDonald’s (WF) operates through various formats and brand extensions including
standalone restaurants, drive- thrus, 24/7, McDelivery, McBreakfast and dessert kiosks.
Majority (~90% as of Dec’2023) of its restaurants feature an in-house McCafé.

Exhibit 4: WFL caters to various market segments

Source: Company, YES Sec

 On-Premise, which includes Dine-in & Takeaways, formed around 59% of revenues as on
9MFY24, rest 41% is with Off-Premise channels like Delivery, On-The-Go Pickup & Drive
Thrus.

Exhibit 5: Post recovery from Covid, on-premise format seems to have stabilized at
~59% revenue mix

On-Premise as a % of revenue Off-Premise as a % of revenue

100%

80% 41 41
54

60%

40%
59 59
20% 46

0%
FY22 FY23 9MFY24

Source: Company, YES Sec

 Integrated ‘Farm to Fork’ supply chain with long relationship with suppliers/vendors make
WFL less susceptible to volatility in raw material prices. Around 95% of their sourcing is
locally done, hence marginal impact from global commodity price movement, supply chain
disruptions & currency fluctuations.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 3
 Westlife Foodworld Ltd

OUR VIEW IS BUILT ON THE FOLLOWING

ARGUMENTS:
1) Foodservice market offers a multi-decadal growth opportunity
The Indian food services market is fragmented, comprising of many unorganized players. Due to
competitive pricing, many small and mid-sized restaurants directly compete with large, organized
brands in the eating out market.

While the India Foodservice industry is expected to grow by 11.3% CAGR over 2023-2026,
organized industry is expected to grow at a faster pace driven by time-pressed schedules, greater
retail space availability, well-informed hygiene conscious consumer aided by rising smartphone &
internet penetration, etc.

Out of the total informal eating out market of Rs3.9tn, unorganized forms the bulk at ~69%. Shift
from unorganized to organized eating taking place gradually across Food industry (packaged and
service) and will be a big driver of growth for organized players over the long term driven by
factors such as growing income levels leading to brand aspirations, young population’s higher
tendency to eat-out, rising premium given to convinience, higher preference given to hygiene
especially among Metros & tier I cities, store expansion by players, favorable landscape for
aggregators leading to shorter delivery time, etc.

While still insignificant, QSR is expected to grow the fastest within the organized segment over
the next few years on the back of widnening reach in smaller cities and the target market
characterised by a younger demographic seeking covenience.

Out of the total opportunity, WFL’s adressable population (West & South of India) is close to
+520mn (~240 large towns) across 11 States/UTs constituting ~55% of GDP.

Exhibit 6: Indian Foodservice market construct and opportunity

Source: Company estimates, Euromonitor, YES Sec; Note: Data as of 2022

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 4
 Westlife Foodworld Ltd

Exhibit 7: QSR is poised for strong 13-14% growth for the next 5-10 years

Source: Euromonitor, Industry Estimate, Jubilant Foodworks Presentation, YES Sec

Eating-out occasions are relatively low even in Urban India compared to other global markets as
per our discussion with industry participants & experts but is on a improving trend with per capita
consumption improvement especially in urban centres. This offers a huge opportunity to make
the pie bigger both at the urban as well as smaller towns/cities. This along with growing
urbanization and young population at scale offers strong potential for growth especially for
under-penetrated category like organized India Foodservice market.

Exhibit 8: Drivers in place for long haul

Source: NSO-MoSPI, World Bank, United Nations Population Division estimate, World Population Review 2023, Jubilant Foodworks Presentation, YES Sec

Exhibit 9: Country-wise per capita spend on food services by urban population

Per Capita Spend on Food Services by Urban Population (USD)
Countries CAGR Growth
CY 2014 CY 2019 CY 2020
(CY2014-19) (CY2019-20)
USA 1,735 2,239 1,616 5% -28%
China 659 684 629 1% -8%
Saudi Arabia 665 769 420 3% -45%
Brazil 634 707 222 2% -69%
South Africa 170 282 98 11% -65%
Indonesia 219 253 139 3% -45%
Turkey 124 181 NA 8% NA
India 94 122* 57* 5% -54%
Source: Technopak research and analysis, YES Sec; Note: India data is for FY19 & FY20; 1 USD = Rs75

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 5
 Westlife Foodworld Ltd

Exhibit 10: India has one of the lowest Average Order Value (AOV)
In USD US China India

Average Order Value (AOV) 10.3 4.2 0.7

Source: Euromonitor, Industry Estimate, Jubilant Foodworks, YES Sec

Exhibit 11: Eating-out frequency in India stands low compared to other markets

Eating Out frequency per week Estimated Avg. Annual Sales Per Store (USD) - 2022
6 4
3.3 3.3
3.1
2.6
2.4
4.3
3.8 1.7 1.8
4 3.6 2 1.5
3.4
0.8
2.6
2.0 2.0
1.6 0
2

Latin America
Asia Pacific

Middle East and

World

Australasia
McDonald (W&S)

North America
Eastern Europe

Western Europe
1.1

Africa
0
India UK France UAE China Italy USA Canada Spain

Source: Source: Company estimates, Euromonitor, GIra, YES Sec; Note: USD INR 80

Over the years, many international brands have entered the market but only a few have been
able to scale the operations/revenue with good profitability. Hence, execution remains a key in
the India Foodservice market. Also, since the opportunity is huge, we do expect more
players/brands to enter the India Foodservice market in the future.

Exhibit 11: Only few international brands have been able to scale with profitability

Source: Jubilant Foodworks Presentation, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 6
 Westlife Foodworld Ltd

2) Strong AUV growth over last 6 years; we believe it still has legs
Within the listed QSR companies, WFL has outperformed the market on Same-Store Sales growth
(SSSG) for larger part of last few years especially excluding Covid period.

Exhibit 12: SSSG (4yr CAGR) has remained superior versus peers
SSSG - 4yr CAGR (%)
JUBI (Dominos India) WFL (McDonalds West & South India)
Restaurant Brands Asia (Burger King India)
12
10
8
6
4
2
0
(2)
(4)
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24
Source: Company, YES Sec; data for 4-year CAGR calculation not available for other listed QSR companies; SSSG= Same-
Store Sales Growth

Exhibit 13: Same store sales growth YoY (SSSG) recent quarterly trend
Same store sales growth YoY-
3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24
SSSG (%)
JUBI (Dominos India) 5.0 3.5 25.5 5.5 (2.5) (2.8) (4.0) (4.0) (3.0)
Devyani (PH) 25.0 2.3 31.5 2.9 (6.1) (3.2) (5.3) (10.4) (12.6)
Devyani (KFC) 24.0 3.0 63.6 13.0 3.0 1.9 (0.9) (3.9) (4.7)
Sapphire (PH) 22.0 3.0 47.0 23.0 (4.0) (4.0) (9.0) (20.0) (19.0)
Sapphire (KFC) 29.0 15.0 65.0 15.0 3.0 2.0 0.0 0.0 (2.0)
WFL (McD West & South) 44.0 23.0 97.0 40.0 20.0 14.0 7.0 1.0 (9.0)
RBA (Burger King India) 30.0 17.0 66.0 27.0 8.6 8.3 3.6 3.5 2.6
Source: Company, YES Sec

We believe average store size of McDonalds store in West & South India is around 3,000 sq.ft.,
way higher than other listed QSR companies in the market. While the industry has been moving
towards small store/delivery centric model over the years, WFL follows the brick-and-clicks
multichannel multi-day part strategy, which gave customers more occasions and choices to
experience the brand and thus justifies the store size. Key market segments of the food service
industry catered by WFL: 1) Category (burgers, wraps, chicken, sides, coffee, desserts, etc.); 2)
Daypart (breakfast, snacks and meals); 3) Channels (dine-in, delivery, takeaway, drive-thru, on-
the-go). Through this approach the company is able to generate the highest average unit volume
in the India QSR industry.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 7
 Westlife Foodworld Ltd

Exhibit 14: Sales per average store/ Average Unit Volumes (AUV – Rs mn) comparison
with peers from FY19 till FY23 - WFL commands the highest AUV in the India QSR
industry

WFL (McDonalds West & South) Sapphire (KFC)

Devyani (KFC) Restaurant Brands Asia (Burger King India)
JUBI (Dominos India) Sapphire (PH)
Devyani (PH)
80

70
67
60

50 49 50 50 48
45 44
40 42
40 40 41
38 39
35 33
30 30 30 32
30 30 30
24
20 20 20 19 19 21
16 16 15 15
13
10 10

0
FY19 FY20 FY21 FY22 FY23

Source: Company, YES Sec

Delivery business has scaled up well for the industry and for WFL as well over the last few years
supported by Covid-induced lockdown. We believe more than 90% of the restaurants now have
McDelivery which is a significant improvement from 53% in FY16. Over FY16-TTM Sept’22,
around 83% of the incremental AUV was driven by Delivery.

Exhibit 15: Over FY16-TTM Sept’22, around 83% of the incremental AUV was driven
by Delivery channel

Source: Company, YES Sec

Post Covid, the strong pent-up demand led to pick up in dine-in consumption led by consumers
preference for offline celebration and socialization. Players like WFL, focussed on omni-channel
strategy, benefitted from the trend, while on the other hand, the pizza category, where the
product is considered relatively more appropriate for delivery, suffered the most on high base as
dine-in’s gained popularity. Relatively higher penetration and elevated competitive intensity is
also hurting the well-entrenched delivery focused pizza players in India.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 8
 Westlife Foodworld Ltd

Dine-in channel also helps the company to have the undivided attention towards the brand and
thus brings higher loyalty. In recent times, QSR brands who started as a delivery business, have
also moved to omnichannel approach seeing the long-term opportunity in building AUV.

Its Average Sales Per Store/ Average Unit Volumes (AUV) has seen sharp improvement over last
6 years. Over FY16-TTM Sept’22, around 80% of the incremental AUV was driven by a
combination of Core burgers, Combos & Meals and McCafe. The strategy to move consumers
from a single product to a combo or meal offering (largely a bundle of burger+side+beverage) has
worked wonders for the company over the years in terms of AUV improvement.

McCafe contributed equally to the AUV improvement as McCafe store penetration improved
from ~32% in FY16 to ~85% by 3QFY23 (will most likely reach 90% penetration by end of FY24)
and contributing around 12-13% of sales for stores with McCafe. We believe, McCafe has not
only improved the AUV and mix, but made the brand even more relevant for today’s customers.

Improvement in Delivery business during Covid has also contributed in a meaningful manner to
the AUV improvement. Hence post the pent-up demand from market opening up, the delivery
business looks to have stabilized, which is also reflecting in the slightly lower AUV in FY24
compared to FY23.

Exhibit 16: Over FY16-TTM Sept’22, around 80% of the incremental AUV was driven
by combination of Core burgers, Combos & Meals and McCafe

Source: Company, YES Sec; Note: Data as on TTM Sept’22

After crossing the Rs65mn mark in FY23, WFL now aims for Rs70-75mn level over the medium-
term. Within the existing portfolio, along with growing preference for meals, premiumization of
burgers, scaling of fried chicken, improving McCafe beverage mix within stores (driven by
attracting new customers and also increasing frequency of visits) and innovative sides, we believe
Desserts can bring additional leg of growth for the company over the long term.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 9
 Westlife Foodworld Ltd

Exhibit 17: AUV improvement has been strong over the last 5-6 years

Rev./store (AUV)
80

70 67
63
60
49 50 50
50
42
37 38
40
32
30

20

10

0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24E

Source: Company, YES Sec; AUV calculated as current FY revenue divided by average of current & previous year-end store

Exhibit 18: McCafe store penetration was sharp over FY16-TTM Sept’22

McCafes McCafe store penetration %

400 90 100
87
80
74
70 80
300 64
54
60
200 43
32 40

100
20
75 111 149 190 223 227 262 311 359
0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24E

Source: Company, YES Sec

Along with the existing portfolio, a look at the global portfolio (products which might be fit for
Indian market in the future), makes us believe that portfolio additions can take place at decent
intervals to give the AUV some boost.

Exhibit 19: Example of chicken products in global portfolio; WFL’s global portfolio
offerings makes us believe in the prospects for further AUV growth

Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 10
 Westlife Foodworld Ltd

Within the store portfolio, there are marquee stores which does superior AUV compared to other
stores. There is also decent gap between the AUV of top 10% of stores vs system. WFL is trying
to unlock this opportunity which will also help scale-up AUV.

Exhibit 20: Top 10% stores vs System - Average per store

Source: Company, YES Sec

Drive-thru (DT) format has been an been imporatant asset, which gives McDonalds an additional
comparative advantage gloablly as well as in India. Average sales from some of the drive thru
restaurants have been higher compared to the normal stores for WFL. For e.g. Destination DT
stores command 1.5x higher Avg. Sales Per Store vs other stores on an average. Going forward,
looking at consumers need for convenience and expansion of highway infrastructure, WFL is
looking to add considerable number of drive-thru restaurants as a part of the new projects
planned especially for South India.

Thus we believe there is still scope of improvement in AUV levels but the growth will be at slower
rate in the near term than what was seen in last 5-6 years as 1) Delivery business will now have
a more stable growth on high base, 2) Store additions in non-Metro cities, that typically for the
industry have lower ADS, 3) Subdued demand environment and external issue to weigh on near
term performance.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 11
 Westlife Foodworld Ltd

3) Tier 1 and smaller towns emerging as the next frontier for store growth
At present, WFL has presence in West & South India with 380 restaurants across 62 cities (as of
December 2023) which includes 73 Drive-thrus (~19% of the restaurants). Out of the total
restaurants, ~90% of them have McCafe (343 McCafes) and 83% of the eligible store base are
Experience-of-the-Future (EOTF) stores (275 EOTF stores). In terms of regions, we believe West
India still is ~60% of its store mix and South contributes for the rest. Metros+tier 1 (T1) store mix
which moved from 81% in FY16 to 74% in TTM Sep’22, would have further gone down as
company continues to look for enhanced penetration in small and emerging towns.

Drive-thrus are an important part of WFL’s strategy. Globally, McDonald’s has been a leader in in
this format. In most of their successful regions, drive-thrus constitute a large portion of sales as
they fall in high traffic regions and are the most preferred value-for-money brand. As on Dec’23,
WFL has ~73 drive-thrus in West & South India and is growing as a format because of the need
for convenience and with the help of improvement in highway infrastructure. It is a differentiating
asset for WFL versus peers because it is the only brand that does drive-thrus at scale. Over the
next 4 years, management believes ~30% of new restaurants will be drive-thrus.

Exhibit 21: Net store additions picking up… Exhibit 22: ...along with city additions

Store Count Net store addition No. of cities Net city addition

9
400 31 45 70 10
22 23 21 23 60
19 19 30 8
300 50 6
15 40 6
4
200
0 30 4
(14)
100 20 1 1
(15) 2
258 277 296 319 305 326 357 380 10 41 42 43 47 56 62
0 (30) 0 0
FY17

FY18

FY19

FY20

FY21

FY22

FY23

9MFY24

FY19

FY20

FY21

FY22

FY23

9MFY24
Source: Company, YES Sec Source: Company, YES Sec

Exhibit 23: Number of stores converted into Experience Exhibit 24: Drive-thrus as a % of stores has been around
of the Future (EOTF) stores have increased sharply over 20% for last few years but WFL aims to focus on this
last 3-4 years format going ahead

No. of EOTF stores EOTF as a % of total stores No. of Drive-thrus Drive-thrus as a % of total eligible stores

72 20 19 19
300 80
76 20
62
60 72
200
36 68
40
64
100
20
60
118 220 275 64 68 73
0 0 56 0
FY22 FY23 9MFY24 FY22 FY23 9MFY24

Source: Company, YES Sec Source: Company, YES Sec

Conventionally, India’s major QSR chains primarily focused on metros and tier-I cities, given high
disposable income along with dense population. However, this paradigm is evolving as tier-II and
tier-III cities emerge as the next frontier for Foodservice retail expansion. WFL has been watchful
and disciplined about the amount of stores being added per annum over the years and have met
their targets. The management has recently decided to up their annual store expansion rate to
40-50 stores (from 25-30 earlier) aiming to reach 580-630 restaurants by 2027 looking at the

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 12
 Westlife Foodworld Ltd

growth opportunity in tier 1 and smaller towns. WFL has penned the target of 45-50 stores in
FY25 with a focus on South India, Smaller towns and Drive Thrus.

Despite near-term demand slowdown, we believe the pace of expansion will remain high (on track
to add 40–45 stores in FY24), as competitive intensity is increasing.

Exhibit 25: Pace of store additions picking up

Net store additions

60
50
50 45
40
40
32 31
30 25 27
23 22 23 21
19 19
20

10

(10)

(20) (14)
FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E
Source: Company, YES Sec

Even smaller burger players like Burger Singh, Wat-a-Burger, Biggies Burger, etc. have called out
their immediate goal to expand their presence in tier-II and tier-III cities which they also believe
has great potential as consumers in this areas still aspire to consume at Foodservice restaurants.
Even from profitabilty angle, these areas are not too bad. While revenue recognized in tier-II and
III areas are lower compared to Metros & tier-I, margins are good as key overheads (upfront
investment as well as operating cost) are lower.

While many food service players have moved to delivery centric model, we believe that WFL’s
focus will remain on its standard McDonalds omnichannel stores (3,000-3,500 sq. ft.) over the
medium-term which has longer leases, lower escalations vs industry, higher capex (but includes
McCafe, EOTF, DTs, Delivery infra and various utility optimization initiatives) and high volume
focus store design.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 13
 Westlife Foodworld Ltd

4) Gross margin improvement along with operating leverage and cost optimization program to
drive operating margins
Margin expansion over FY20-23 was driven by gross margin improvement and leverage,
supported by savings.

Exhibit 26: Common size statement (includes INDAS 116 impact)

Common size statement FY20 FY21 FY22 FY23 FY24E
Revenues 100.0 100.0 100.0 100.0 100.0
Gross Profit 65.2 64.7 65.4* 69.9 70.3
Staff Cost 14.2 18.1 13.3 13.6 13.8
Other Expenses 36.9 38.9 40.5 39.0 40.7
EBITDA 14.2 7.7 11.6 17.2 15.8
EBIT 5.3 (7.9) 2.9 10.6 8.2
PBT (0.6) (13.1) (1.6) 6.6 3.9
Recurring PAT 0.6 (10.4) (1.6) 5.3 3.1
Source: Company, YES Sec; Note: There is regrouping of Processing Charges from cost of goods sold (COGS) to other
expenses starting FY23. FY22 gross margin adjusted for regrouping stood at 67.5%.

Exhibit 27: Margin expansion over FY20-23 driven by gross margin improvement and
leverage, supported by savings
0.5 1.5
20 4.7
6.4 0.0
0.3 2.5

10
17.2
14.2

0
FY20 EBITDA

Logistics service
COGS

FY23 EBITDA
Utility Costs

Royalty fee
Employee Costs

Marketing and

Other Overheads
promotions
margin (%)

margin (%)
charges

Source: Company, YES Sec; Note: Adjusted for regrouping of Processing charges, we believe gross margin would have driven
~270bps of margin improvement

WFL continues to have portfolio of offerings across prices points to cater to its different target
audience within a family keeping in mind value-for-money quotient. Focus of the company will
remain on offering value while premiumizing the portfolio and upgrading the consumers thus
improving gross margins graduallly.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 14
 Westlife Foodworld Ltd

Exhibit 28: Pricing ladder of offerings in the core portfolio allows for customer acquisition and retention

Source: Company, YES Sec

WFL also have initiatives like McSaver meals which offers its products bundled together at an
affordable price.

WFL product-mix improvement journey over the last few years was driven by movement of
consumers towards value combos/meals and increase in store penetration of McCafes. We
believe along with improving mix of McCafe within the product mix of stores (McCafe
contribution to sales for stores with McCafe will improve to 15-18% by FY28 from current 12-
13%), premiumization in core and filling meals strategy will drive the next leg of product mix
improvement for WFL. This along with net pricing growth and margin accretive new launches will
drive gross margin expansion for the company in medium-to-long term.

Exhibit 29: Indicative margin profile of products

Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 15
 Westlife Foodworld Ltd

As overall volumes scales for the company with larger store network, operating leverage will have
a positive impact as G&A cost as a % of revenue will reduce. In addition to that, WFL’s focus on
unlocking operating leverage potential by scaling up AUV towards marquee stores for rest of the
stores will also have a significant benefit.

Gross margin improvement along with operating leverage and cost optimization program to drive
margin expansion over the medium to long term, slightly offset by annual employee cost hikes,
store gestation costs and increase in royalty rates (which will increase progressively from current
4.5% to 5.5% by FY28 [excluding GST]).

Exhibit 30: Royalty rates increase likely to be progressive over the medium-term
Royalty fees rates (%)
8

6 5.5 5.5
5.0 5.0
4.5

0
FY24 FY25 FY26 FY27 FY28

Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 16
 Westlife Foodworld Ltd

WFL offers SSSG driven earnings growth

We are building ~9% SSSG CAGR over FY24E-26E, ~5.1% over FY23-26E. This, along with
aggressive store expansion (200+ new restaurants in the next 3-4 years, taking the base to 500+
stores with 50-60% store openings in small and emerging towns) should lead to ~16% revenue
CAGR over FY24E-26E, ~11.9% over FY23-26E. The margin profile is also improving as AUV has
crossed the Rs60mn+ mark, leading to favorable operating leverage. This, along with cost savings
and consistent but modest gross margin improvement (led by stable input costs and mix + pricing),
will support EBITDA margin expansion (building ~200bps expansion over FY24E-26E).

Exhibit 31: SSSG impacted in FY24 due to subdued Exhibit 32: WFL is on track to add 40–45 stores in FY24
demand YoY and other external issues and targeting 45-50 stores in FY25

SSSG (%) Store Count Net store additions

75
57.8 600 50 60
60 45
40 50
500
45 36.1
31 40
400 22 23
30 15.8 17.5 19 19 21 30
10.0 8.0
15 4.0 4.0 300 20
(2.2)
10
0 200
(24.4) 0
(15) 100 (14)
(10)
(30) 258 277 296 319 305 326 357 397 442 492
0 (20)
FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E
Source: Company, YES Sec Source: Company, YES Sec

Exhibit 33: We thus expect revenues to grow by ~12% Exhibit 34: AUV to recover in FY25 to almost FY23
CAGR over FY23-26E (~16% CAGR over FY24E-26E) levels and restart the gradual improvement journey
Rs mn Revenue Revenue growth % Rev./store (AUV)
35 80 80
67 66 68
30 59.9 60 70 63
44.5 60 50
25 40 49 50
50 42
20 21.9 23.5 20 37 38
16.9 14.5 40
11.7 32
15 10.4 4.0 0
30
10 (20) 20
(36.3)
11.3

14.0

15.5

15.8

22.8

23.7

27.7

31.7

5 (40) 10
9.3

9.9

0 (60) 0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E
FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E

Source: Company, YES Sec Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 17
 Westlife Foodworld Ltd

Exhibit 35: Product mix & net pricing to help gross Exhibit 36: ..this along with operating leverage & cost
margin improvement over the next few years.. savings (slightly offset by increase in some overheads
like royalty fees) to drive EBITDA margin
% %
Gross Margin EBITDA Margin
72 70.3 70.5 70.7 20
69.9 17.8
17.2 17.4
70 18 15.8
68 16 14.2
65.2 65.4
66 64.7 14
63.5 11.6
64 62.6 12
10 8.9
62 60.6 7.7
8 6.8
60
6 5.0
58
4
56
2
54
0
FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E
Source: Company, YES Sec; Note: There is regrouping of Processing Charges from Source: Company, YES Sec
cost of goods sold (COGS) to other expenses starting FY23. FY22 gross margin
adjusted for regrouping stood at 67.5%.

Exhibit 37: Margin expansion over FY24E-26E to be driven by operating leverage and
mix+pricing supported by cost optimization measures

20 1.0 0.2 0.2 0.0 1.3

0.9 0.5

10 18.9
15.8

0
FY24E EBITDA

FY26E EBITDA
Logistics service
COGS

Employee Costs

Utility Costs

Marketing and

Royalty fee

Other Overheads
promotions
margin (%)

margin (%)
charges

Source: Company, YES Sec

Exhibit 38: We thus build EBITDA to grow by ~13% Exhibit 39: Expect recurring PAT to grow by ~17% CAGR
CAGR over FY23-26E (~23% CAGR over FY24E-26E) over FY23-26E (~62% CAGR over FY24E-26E)
%
Rs bn EBITDA EBITDA Growth % Rs mn Recurring PAT PAT Margin
5.6 2,500 6.1
6 200 5.2 1,929.7 8 5.3
4.8 2,000 6 3.1
5 140.5 115.1 150 1.6 1.5 4
1,500 0.6 1,209.4 1,437.9
3.9 3.7 2
4 100 1,000 (1.2) (1.6) 733.1
0
64.8 62.1 75.4 500 184.9 213.9 92.9 (2)
3 50
2.2 28.5
1.8 17.1 0 (4)
2 10.1 0
1.3 (4.6) (6)
(500) (110.1)
0.8 0.8 (10.4) (252.3) (8)
1 0.5 (50) (1,000) (10)
0 (65.5) (100) (1,500) (1,026.6) (12)
FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E
FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E

Source: Company, YES Sec Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 18
 Westlife Foodworld Ltd

Exhibit 40: FCF to remain positive with stable business Exhibit 41: Return ratios to improve in FY25 and FY26
environment
Rs mn %
Cash flow from Operations Free cash flow RoE RoCE
4,862 5,300 40 35.5
6,000 3,883 3,899 30.2 30.1
4,000 2,321 30 23.5 25.5
1,506 1,726 20.4 22.1
2,000 458 1,027 1,036
20 12.2
4.9 6.9 11.2 8.4
0
693 943 1,384 1,514 10 3.5 3.8 1.6
(2,000) 47 (329) (133) (129) 0.5
(449)
0
(4,000)
(10) (2.1)
(6,000) (6.6)(5.3)
(8,000) (20)
(7,750) (19.4)
(10,000) (30)
FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY26E
Source: Company, YES Sec Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 19
 Westlife Foodworld Ltd

Recent quarter results hint at near-term revenue pain for sector, as also WFL
 WFL saw subdued (weakness in eating out trend) demand in 3QFY24. Festive season saw
some uptick, but weakness continued thereafter. Reported SSSG was partly impacted by
floods in South India and external issues.
 External issue impact: About 30% of WFL stores across West and South were impacted by
external issues. These stores witnessed 10-50% decline in daily sales from mid-October’23
onwards leading to contrasting SSSG trends. Normalized SSSG would have declined by 3%
versus the reported 9% decline. Slowdown in market, high base and slight delay in being
aggressive on value platform led to 3% SSSG decline (normalized for external issue). External
issue impact was higher in South India than in West India. External issue might take 1-2
quarter to get resolved but seems to have bottomed out. WFL has initiated various measures
to highlight that McDonald’s India is a truly Indian Company. Overall demand trends seem to
have largely stabilized currently.
 On Premise business declined 5% YoY, largely led by lower footfalls in affected stores. Off-
Premise business grew by 3% YoY led by Delivery & Drive thrus. Off-Premise contribution
was 42% to total sales.
 Average TTM Sales Per Store remains stable at Rs64.4mn.
 Margins performance: Overall gross margin came in at 70.3%, up 10bps YoY/20bps QoQ
with stable inflation. Lower operating leverage slightly offset by some incentives in royalty
for record store openings meant that EBITDA margin down 200bps YoY to 16%.
 WFL added 11 restaurants & closed 1 during Q3 FY24. Company continues to target 40-45
store opening in FY24. It aims to open more store in FY25 compared to what it opens in
FY24 with a focus on South India, smaller towns and ‘Drive Thrus’ format, aiming to reach
580-630 restaurants by 2027.

Exhibit 42: Recent quarters result snapshot

Y/E March (Rsmn) 3QFY23 2QFY24 3QFY24 YoY (%) QoQ (%) 9MFY23 9MFY24 YoY (%)
Net Revenue 6,115 6,147 6,003 (1.8) (2.4) 17,218 18,295 6.3
COGS 1,824 1,837 1,784 (2.2) (2.9) 5,721 5,429 (5.1)
Gross margin % 70.2 70.1 70.3 0.1 0.2 66.8 70.3 3.6
Payroll and Employee Benefits 547 581 552 1.0 (4.9) 1,480 1,684 13.8
% of sales 8.9 9.4 9.2 0.3 (0.2) 8.6 9.2 0.6
Royalty 280 316 243 (13.3) (23.2) 788 877 11.3
% of sales 4.6 5.1 4.0 (0.5) (1.1) 4.6 4.8 0.2
Occupancy and Other Operating Expenses 2,006 2,054 2,072 3.3 0.9 5,309 6,182 16.4
% of sales 32.8 33.4 34.5 1.7 1.1 30.8 33.8 3.0
General & Administrative Expense 354 363 392 10.7 8.0 909 1,114 22.6
% of sales 5.8 5.9 6.5 0.7 0.6 5.3 6.1 0.8
EBITDA 1,103 997 960 (12.9) (3.7) 3,012 3,010 (0.1)
EBITDA margin % 18.0 16.2 16.0 (2.0) (0.2) 17.5 16.5 (1.0)
Depreciation 386 439 455 18.0 3.6 1,110 1,323 19.2
EBIT 717 557 505 (29.6) (9.3) 1,902 1,687 (11.3)
EBIT margin % 11.7 9.1 8.4 (3.3) (0.6) 11.0 9.2 (1.8)
Interest expenses 234 274 282 20.6 2.9 674 816 21.0
Other income 36 32 44 20.2 37.4 91 128 40.2
Exceptional items (40) (13) (36) - - (101) (60) -
PBT 480 302 231 (51.9) (23.5) 1,217 939 (22.9)
Tax 116 78 59 (49.8) (25.4) 302 254 (15.9)
Effective tax rate % 24.3 26.0 25.3 1.1 (0.6) 24.8 27.1 2.3
Recurring/Adjusted PAT 404 237 209 (48.3) (11.9) 1,016 744 (26.8)
PAT margin % 6.6 3.9 3.5 (3.1) (0.4) 5.9 4.1 (1.8)
Reported PAT 364 224 173 (52.6) (22.9) 915 684 (25.2)
EPS 2.6 1.4 1.1 (57.3) (22.9) 6.5 4.4 (32.6)
Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 20
 Westlife Foodworld Ltd

Exhibit 43: Revenues down by 1.8% YoY to Rs6bn in Exhibit 44: Reported SSSG declined 9%; adjusted for
3QFY24 external issues the decline would stand at ~3%
Rs bn Revenue Revenue growth YoY % % SSSG

176.0 182.6
8 200 200
6.1 6.1 6.1 6.0
5.7 5.6 150 150
6 5.4
107.6 97.0
84.0 4.8 4.6 83.7
100 100
3.6 3.9
4 3.3 46.7 48.5 44.0 40.0
2.6 27.3 28.2 22.3 50 50 23.0 20.0 14.0
14.2 7.4 10.5 7.0 1.0
6.3 (1.8) (9.0)
2 (24.9) 0 (24.0)
0

0 (50) (50)

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

Source: Company, YES Sec Source: Company, YES Sec

Exhibit 45: AUV down slightly in recent quarters led by Exhibit 46: Total restaurants as on 3QFY24 stands at 380
subdued demand YoY and other external issues
Rs mn
TTM AUV Annualized Total restaurants Net store additions
75
380
400 357 361 370 20
341
60 326 331 337 18
304 305 305 310 316 16
12
45 300 11
9 12
8
30 6 6 8
5 5
200 4
3
15 1 4
0
100 0
0
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

Source: Company, YES Sec Source: Company, YES Sec

Exhibit 47: % of restaurants with McCafe now stands at Exhibit 48: On-Premise came back post Covid impact and
~90% as on 3QFY24 now stands at ~59% as on 9MFY24

No. of restaurants with McCafe Net McCafe additions % On-Premise mix Off-Premise mix
23 100%
400 342 25
311 315 326
274 288 20 43 42 45 48 42 41 40 41 40 41 42
267 16 75%
300 248 262 15 55
227 227 234 240 14
15 77
11
200 50%
7 8 7
6 10
5 4
100 3 57 58 55 52 58 59 60 59 60 59 58
5 25% 45
0
23
0 0
0%
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

Source: Company, YES Sec Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 21
 Westlife Foodworld Ltd

Exhibit 49: Gross margin up 20bsp QoQ in 3QFY24 with Exhibit 50: Restaurant operating margin impacted by
normalized inflation deleverage
% %
Gross margin Restaurant operating margin
75
30
71.9
23.8 24.5 23.0
72 70.2 70.6 70.1 70.3 25 22.6 22.3 21.6 22.7 22.1 22.5
21.3
68.2 20 17.4
69 15.4
66.5 66.4
65.7 65.4 65.5 15
66 64.7 64.3 9.8
10
63
5
60 0
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24
Source: Company, YES Sec Source: Company, YES Sec

Exhibit 51: EBITDA margin thus down 200bps YoY to Exhibit 52: Recurring PAT thus down to Rs209mn
16%
Rs bn EBITDA EBITDA margin % Rs mn Recurring PAT
1.2 17.3 17.5 17.1 17.3 18.0 16.5 17.1 20.0 600
16.0 16.2 16.0
14.7 404
1.0 16.0 346
400 267 299
11.9 209 227 237 209
0.8 162
12.0 200
0.6
8.0 0
0.4
2.0 4.0 (41) (65) (44)
0.2 (200)
0.6 0.5 0.1 0.5 0.8 0.7 0.9 1.0 1.1 0.9 1.1 1.0 1.0
0.0 0.0
(400)
(334)
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24
Source: Company, YES Sec Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 22
 Westlife Foodworld Ltd

We initiate coverage on WFL with a BUY rating and a target price of Rs940
 Our preference for WFL is based on its focused strategy on targeting the India Foodservice
opportunity through McDonalds (West & South) franchisee and drive topline growth with
consistent industry leading SSSG delivery supported by store expansion.
 To comepte against incumbents, new players and unorganized market, McDonalds possesses
following USP’s: (1) An “All day” menu (2) Continuous focus on value (3) Combos,
Customizations & Innovations and (4) Sustaining quality & taste over the years.
 After crossing the Rs65mn mark in FY23, WFL is now aiming for Rs70-75mn level over the
medium-term.
 We are building ~9% SSSG CAGR over FY24E-26E, ~5.1% over FY23-26E. This, along with
aggressive store expansion (to open 200+ new restaurants in the next 3-4 years, taking the
base to 500+ stores with 50-60% store openings in small and emerging towns) should lead
to ~16% revenue CAGR over FY24E-26E, ~11.9% over FY23-26E.
 The margin profile is also improving as AUV has crossed the Rs60mn+ mark, leading to
favorable operating leverage. This, along with cost savings and consistent but modest gross
margin improvement (led by stable input costs and mix+pricing), will support EBITDA margin
expansion (building ~200bps expansion over FY24E-26E).
 At CMP, the stock is trading at ~24x/20x FY25E/FY26E EBITDA (post IND-AS 116).
 WFL has recently introduced a dividend policy (as near as possible to 25% of PAT) subject to
need for growth capital, positive cash flow and other parameteres stated in the policy.
Improving return ratios command beter valuation than earlier years.
 We initiate with a BUY rating based on EV/EBITDA multiple of ~26x on March’26E EBITDA
(post IND-AS 116), arriving at a TP of Rs940.
 We believe near-term sectoral demand pain and company-specific overhang translates into
a decent medium-term investment (~14% CAGR return over next 3 years).
 Overhangs: Along with subdued demand for the sector, external issues (highlighted in
3QFY24 earnings) will remain the only other overhang in near term, since the FSSAI (apex
food safety standards regulator of the country) has given a clean chit to WFL on the the
ongoing scrutiny by state authorities regarding use of ‘Fake Cheese’.
 Risks to our estimates
o Extremely high competition especially in WFL’s operating areas of West & South
India markets.
o Changes in consumers perception with respect to healthy eating habits or changes
in other dietary habits.
o Concerns about food safety, foodborne illness or other negative food-related
incidents and negative publicity revolving around it could have an adverse effect on
the Foodservice industry.
o Any other external issues.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 23
 Westlife Foodworld Ltd

Exhibit 53: Currently trading at ~24x 1-yr forward EV/EBITDA lower than the median
multiple
x
1-yr Forward EV/EBITDA -1 SD Median EV/EBITDA +1 SD

100
90
80
70
60
50
43.8
40
30 30.6

20 23.9
17.5
10
0
Mar-19

Sep-19

Mar-20

Sep-20

Mar-21

Sep-21

Mar-22

Sep-22

Mar-23

Sep-23

Mar-24
Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 24
 Westlife Foodworld Ltd

FINANCIALS
Exhibit 54: Balance Sheet
Y/E March (Rs mn) FY22 FY23 FY24E FY25E FY26E
Share capital 312 312 312 312 312
Reserves 4,309 5,347 6,019 7,457 9,387
Net worth 4,621 5,659 6,331 7,769 9,698
Total debt 2,010 2,070 2,570 3,570 3,570
Other long-term liabilities 8,669 10,090 10,296 10,506 10,721
Deferred tax liability -520 -604 0 0 0
Total liabilities 14,780 17,216 19,197 21,845 23,989
Gross block 15,033 18,125 19,825 21,731 23,802
Depreciation 10,011 11,533 12,586 13,729 14,981
Net block 5,022 6,591 7,238 8,002 8,821
Right of use assets 7,718 8,758 9,749 11,214 12,814
CWIP & Intangibles 1,238 1,447 1,165 1,098 1,030
Investments 1,504 1,299 759 766 774
Inventories 559 714 553 922 755
Debtors 133 107 136 141 168
Cash 232 284 1,811 2,745 2,762
Loans & advances 907 1,044 1,095 1,151 1,212
Other current assets 142 142 156 171 188
Total current assets 1,973 2,291 3,751 5,130 5,085
Creditors 1,722 1,877 1,784 2,432 2,312
Other current liabilities & provisions 953 1,293 1,681 1,933 2,223
Total current liabilities 2,675 3,170 3,465 4,365 4,534
Total assets 14,780 17,216 19,197 21,845 23,989
Source: Company, YES Sec

Exhibit 55: Income statement

Y/E March (Rs mn) FY22 FY23 FY24E FY25E FY26E
Net Revenue 15,765 22,780 23,692 27,702 31,719
% Growth 59.9 44.5 4.0 16.9 14.5
SSG % 57.8 36.1 -2.2 10.0 8.0
COGS 5,451 6,860 7,032 8,185 9,309
Staff costs 2,095 3,106 3,261 3,742 4,221
Other expenses 6,392 8,885 9,649 10,956 12,549
Total expenses 13,939 18,851 19,943 22,884 26,079
EBITDA 1,826 3,929 3,749 4,819 5,640
% growth 140.5 115.1 -4.6 28.5 17.1
EBITDA margin (%) 11.6 17.2 15.8 17.4 17.8
Other income 108 141 174 231 281
Interest costs 826 928 1,114 1,133 1,123
Depreciation 1,364 1,522 1,799 1,995 2,220
Profit before tax (before exceptional
-256 1,620 1,010 1,922 2,579
items)
Exceptional items 0 -128 -85 0 0
Tax -4 379 254 484 649
PAT (before exceptional items) -252 1,212 735 1,438 1,930
Reported PAT -252 1,114 672 1,438 1,930
PAT margin (%) -1.6 5.3 3.1 5.2 6.1
% Growth - - -39.4 96.1 34.2
Source: Company, YES Sec

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 25
 Westlife Foodworld Ltd

Exhibit 56: Cash flow statement

Y/E March (Rs mn) FY22 FY23 FY24E FY25E FY26E
PAT (252) 1,209 733 1,438 1,930
Depreciation 1,364 1,522 1,799 1,995 2,220
Other income (108) (141) (174) (231) (281)
(Inc.)/dec. in working capital (104) 366 427 527 309
Others 826 928 1,114 1,133 1,123
Cash flow from operations 1,726 3,883 3,899 4,862 5,300
Capital expenditure (-) (1,859) (4,012) (2,956) (3,478) (3,786)
Net cash after capex (133) (129) 943 1,384 1,514
Inc./(dec.) in investments and other
519 210 649 152 195
assets
Cash from investing activities (1,339) (3,802) (2,307) (3,326) (3,590)
Inc./(dec.) in total borrowings (142) 60 500 1,000 0
Others 201 410 (305) (923) (908)
Cash from financial activities 59 470 (91) (570) (1,796)
Others (324) (499) 98 (21) 67
Opening cash balance 110 232 284 1,811 2,745
Closing cash balance 232 284 1,811 2,745 2,762
Change in cash balance 122 52 1,599 945 (19)
Source: Company, YES Sec

Exhibit 57: Growth and Ratio matrix

Y/E March FY22 FY23 FY24E FY25E FY26E
Per share (Rs)
EPS (1.6) 7.8 4.7 9.2 12.4
Book value 29.6 36.3 40.6 49.8 62.2
Valuation (x)
P/Sales 7.3 5.1 4.9 4.2 3.6
EV/sales 7.3 5.1 4.9 4.2 3.6
EV/EBITDA 63.4 29.5 30.8 24.0 20.5
P/E NA 95.4 157.4 80.3 59.8
P/BV 25.0 20.4 18.2 14.9 11.9
Return ratios (%)
RoCE* 8.4 35.5 25.5 30.2 30.1
RoE (5.3) 23.5 12.2 20.4 22.1
RoIC* 3.8 17.3 12.4 16.5 18.0
Profitability ratios (%)
Gross margin 65.4 69.9 70.3 70.5 70.7
EBITDA margin 11.6 17.2 15.8 17.4 17.8
EBIT margin 2.9 10.6 8.2 10.2 10.8
PAT margin (1.6) 5.3 3.1 5.2 6.1
Liquidity ratios (%)
Current ratio 0.6 0.6 0.6 0.7 0.6
Quick ratio 0.5 0.4 0.6 0.6 0.6
Solvency ratio (%)
Debt to Equity ratio 0.4 0.4 0.4 0.5 0.4
Turnover ratios
Total asset turnover ratio (x) 2.6 3.2 2.7 2.4 2.4
Fixed asset turnover ratio (x) 3.1 3.5 3.3 3.5 3.6
Inventory days 34.3 33.9 32.9 32.9 32.9
Debtors days 2.6 1.9 1.9 1.8 1.8
Creditor days 119.6 95.7 95.0 94.0 93.0
Source: Company, YES Sec; Note: There is regrouping of Processing Charges from cost of goods sold (COGS) to other
expenses starting FY23. FY22 gross margin adjusted for regrouping stood at 67.5%.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 26
 Westlife Foodworld Ltd
DISCLAIMER securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose
Investments in securities market are subject to market risks, read all the
possession this document may come are required to inform themselves
related documents carefully before investing.
of and to observe such restriction.
The information and opinions in this report have been prepared by YSL
YES Securities (India) Limited distributes research and engages in other
and are subject to change without any notice. The report and
approved or allowable activities with respect to U.S. Institutional
information contained herein are strictly confidential and meant solely
Investors through SEC 15a-6 rules and regulations under an exclusive
for the intended recipient and may not be altered in any way,
chaperone arrangement with Brasil Plural Securities LLC. The views and
transmitted to, copied or redistributed, in part or in whole, to any other
sentiments expressed in this research report and any findings thereof
person or to the media or reproduced in any form, without prior written
accurately reflect YES Securities (India) Limited analyst’s truthful views
consent of YSL.
about the subject securities and or issuers discussed herein. YES
The information and opinions contained in the research report have Securities (India) Limited is not registered as a broker-dealer under the
been compiled or arrived at from sources believed to be reliable and Securities Exchange Act of 1934, as amended (the "Exchange Act") and is
have not been independently verified and no guarantee, representation not a member of the Securities Investor Protection Corporation ("SIPC").
of warranty, express or implied, is made as to their accuracy, Brasil Plural Securities LLC is registered as a broker-dealer under the
completeness, authenticity or validity. No information or opinions Exchange Act and is a member of SIPC. For questions or additional
expressed constitute an offer, or an invitation to make an offer, to buy information, please contact Gil Aikins (gil.aikins@brasilplural.com) or call
or sell any securities or any derivative instruments related to such +1 212 388 5600.
securities. Investments in securities are subject to market risk. The value
This Research Report is the product of YES Securities (India) Limited. YES
and return on investment may vary because of changes in interest rates,
Securities (India) Limited is the employer of the research analyst(s) who
foreign exchange rates or any other reason. Investors should note that
has prepared the research report. YES Securities (India) Limited is the
each security's price or value may rise or fall and, accordingly, investors
employer of the YES Securities (India) Limited Representative who is
may even receive amounts which are less than originally invested. The
responsible for the report, are responsible for the content of the YES
investor is advised to take into consideration all risk factors including
Securities (India) Limited Research Report; any material conflicts of
their own financial condition, suitability to risk return profile and the
interest of YES Securities (India) Limited in relation to the issuer(s) or
like, and take independent professional and/or tax advice before
securities discussed in the YES Securities (India) Limited Research Report.
investing. Opinions expressed are our current opinions as of the date
This YES Securities (India) Limited Research Report is distributed in the
appearing on this report. Investor should understand that statements
United States through Brasil Plural Securities LLC (BPS). The research
regarding future prospects may not materialize and are of general
analyst(s) preparing the research report is/are resident outside the United
nature which may not be specifically suitable to any particular investor.
States (U.S.) and is/ are not associated persons of any U.S. regulated
Past performance may not necessarily be an indicator of future
broker-dealer and therefore the analyst(s) is/are not subject to
performance. Actual results may differ materially from those set forth
supervision by a U.S. broker-dealer, and is/are not required to satisfy the
in projections. Registration granted by SEBI and certification from NISM
regulatory licensing requirements of FINRA or required to otherwise
in no way guarantee performance of the intermediary or provide any
comply with U.S. rules or regulations regarding, among other things,
assurance of returns to investors.
communications with a subject company, public appearances and trading
Technical Analysis reports focus on studying the price movement and securities held by a research analyst account. This report is intended for
trading turnover charts of securities or its derivatives, as opposed to distribution by YES Securities (India) Limited only to "Major Institutional
focussing on a company’s fundamentals and opinions, as such, may not Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and
match with reports published on a company’s fundamentals. Exchange Act, 1934 (the Exchange Act) and interpretations thereof by
U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a
YSL, its research analysts, directors, officers, employees and associates
6(a)(2). If the recipient of this report is not a Major Institutional Investor
accept no liabilities for any loss or damage of any kind arising out of the
as specified above, then it should not act upon this report and return the
use of this report. This report is not directed or intended for distribution
same to the sender. Further, this report may not be copied, duplicated
to, or use by, any person or entity who is a citizen or resident of or
and/or transmitted onward to any U.S. person or entity. Transactions in
located in any locality, state, country or other jurisdiction, where such
securities discussed in this research report should be effected through
distribution, publication, availability or use would be contrary to law,
Brasil Plural Securities LLC (BPS) or another U.S. registered broker
regulation or which would subject YSL and associates to any
dealer/Entity as informed by YES Securities (India) Limited from time to
registration or licensing requirement within such jurisdiction. The
time.

YES Securities (India) Limited Registration Nos.: CIN: U74992MH2013PLC240971 | SEBI Single
nd
Registration No.: NSE, BSE, MCX & NCDEX : INZ000185632 | Member
Registered Address: 2 Floor, North Side, YES BANK House, Code: BSE - 6538, NSE - 14914, MCX - 56355 & NCDEX - 1289 | CDSL &
Off Western Express Highway, Santacruz East, NSDL: IN-DP-653-2021 | MERCHANT BANKER: INM000012227 |
Mumbai - 400 055, Maharashtra, India. RESEARCH ANALYST: INH000002376 | INVESTMENT ADVISER:
Correspondence Address: 7th Floor, Urmi Estate Tower A, Ganpatrao INA000007331 | Sponsor and Investment Manager to YSL Alternates
Kadam Marg, Opp. Peninsula Business Park, Lower Parel (West), Alpha Plus Fund (CAT III AIF) SEBI Registration No.: IN/AIF3/20-21/0818 |
Mumbai – 400 013, Maharashtra, India. AMFI ARN Code – 94338.

 research@ysil.in | Website: www.yesinvest.in Details of Compliance Officer: Name: Aditya Goenka,

Email id: compliance@ysil.in, Contact No: 022- 65078127 (Extn: 718127)

Grievances Redressal Cell: customer.service@ysil.in/igc@ysil.in

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 27
 Westlife Foodworld Ltd

DISCLOSURE OF INTEREST RECOMMENDATION PARAMETERS FOR FUNDAMENTAL

REPORTS
Name of the Research Analyst : Vishal Punmiya
Analysts assign ratings to the stocks according to the expected
The analyst hereby certifies that opinion expressed in this research
report accurately reflect his or her personal opinion about the subject upside/downside relative to the current market price and the estimated
securities and no part of his or her compensation was, is or will be target price. Depending on the expected returns, the recommendations
directly or indirectly related to the specific recommendation and opinion are categorized as mentioned below. The performance horizon is 12 to
expressed in this research report. 18 months unless specified and the target price is defined as the
analysts’ valuation for a stock. No benchmark is applicable to the ratings
Sr. mentioned in this report.
Particulars Yes/No
No.
Research Analyst or his/her relative’s or YSL’s
1 No
financial interest in the subject company(ies)
BUY: Upside greater than 20% over 12 months
Research Analyst or his/her relative or YSL’s
actual/beneficial ownership of 1% or more ADD: Upside between 10% to 20% over 12 months
2 securities of the subject company(ies) at the end No
NEUTRAL: Upside between 0% to 10% over 12 months
of the month immediately preceding the date of
publication of the Research Report REDUCE: Downside between 0% to -10% over 12 months
Research Analyst or his/her relative or YSL has
3 any other material conflict of interest at the time No SELL: Downside greater than -10% over 12 months
of publication of the Research Report NOT RATED / UNDER REVIEW
Research Analyst has served as an officer, director
4 No
or employee of the subject company(ies)
YSL has received any compensation from the
5 No
subject company in the past twelve months
YSL has received any compensation for
investment banking or merchant banking or
6 No
brokerage services from the subject company in
the past twelve months
YSL has received any compensation for products
or services other than investment banking or
7 No
merchant banking or brokerage services from the
subject company in the past twelve months
YSL has received any compensation or other
8 benefits from the subject company or third party No
in connection with the research report
YSL has managed or co-managed public offering
9 of securities for the subject company in the past No
twelve months
Research Analyst or YSL has been engaged in
10 market making activity for the subject No
company(ies)

Since YSL and its associates are engaged in various businesses in the
financial services industry, they may have financial interest or may have ABOUT YES SECURITIES (INDIA) LIMITED
received compensation for investment banking or merchant banking or
brokerage services or for any other product or services of whatsoever YES Securities (India) Limited (‘‘YSL’’) is a wholly owned subsidiary of YES
nature from the subject company(ies) in the past twelve months or BANK LIMITED. YSL is a Securities and Exchange Board of India (SEBI)
associates of YSL may have managed or co-managed public offering of registered Stock broker holding membership of National Stock Exchange
securities in the past twelve months of the subject company(ies) whose (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange
securities are discussed herein. (MCX) & National Commodity & Derivatives Exchange (NCDEX). YSL is
also a SEBI-registered Category I Merchant Banker, Investment Adviser
Associates of YSL may have actual/beneficial ownership of 1% or more and Research Analyst. YSL is also a Sponsor and Investment Manager of
and/or other material conflict of interest in the securities discussed Alternate Investment Fund - Category III (YSL Alternates) and AMFI
herein. registered Mutual Fund Distributor. The Company is also a registered
Depository Participant with CDSL and NSDL. YSL offers, inter alia,
VISHAL SURESHKUMAR Digitally signed by VISHAL
trading/investment in equity and other financial products along with
SURESHKUMAR PUNMIYA
PUNMIYA Date: 2024.03.17 21:26:49 +05'30'
various value added services. We hereby declare that there are no
disciplinary actions taken against YSL by SEBI/Stock Exchanges.

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 28