Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Westlife Development - Weak dine-in continues to be a drag - ICICI Securities

Posted On: 2021-01-21 22:26:06 (Time Zone: Arizona, USA)

3Q performance was subdued as revenues declined 25% (SSSG declined 24%) despite all stores being operational. However, consistent cost optimization led the reduction in average monthly fixed cost by ~30% (renegotiating rents, reimagining supply chain, variable staff costs, etc.), thereby bringing back margins close to pre-Covid levels. Although the trajectory of improvement of convenience formats (delivery, drive-thru, takeaway and on-the-go - together contribute >50% of revenues) seems promising, recovery of core dine-in business (still at 70-75% of pre-COVID levels in Q3) depends on improvement in consumer sentiment. Long-term benefits from expansion of food service market remain intact. Store additions is a positive (opened 3 stores in Q3). ADD.

- Substantial revenue decline despite all stores operational: In 3QFY21, revenue / EBITDA / recurring PAT declined 25% / 29% / 84%. Westlife reported 24% same store sales decline. However, revenue grew 55% QoQ due to opening of one of its largest state - Maharashtra. Having said that, complete recovery across most of the large channels is yet to happen with McDelivery still at ~90% YoY and Dine-in at ~75% of pre-Covid levels (even lower YoY) even with all stores being operational. Channels like Drive-Thru have almost doubled sales on a YoY basis and On-the-Go channel is witnessing strong MoM growth.

- Store expansion to return from FY22: Westlife opened 3 stores and closed 10 McDonald's stores in Q3, taking the total store count to 304 (43 cities). Store closures are largely due to network optimisation and management guided to no further store closures. A key positive is the return to potential 25-30 store additions from FY22 onwards, as per management. Westlife also added 3 McCafe stores during the quarter taking the total count to 227.

- Structural cost savings leading to lower restaurant break-even point: Better sourcing and cost optimisation limited gross margin decline to just 30bps YoY (to 65.7%) despite lower volumes. Further, gross margins of 65.5% in Dec'20 are similar to Q4FY20 margins. Comparable EBITDA margin declined 190bps YoY to 10.2%, a strong performance given 25% revenue decline, driven by 25-30% reduction in fixed costs and optimisation of some variable cost leading to lower restaurant break-even point. This also led to a flattish (YoY) EBITDA margins of 13.1% in Dec'20, despite 20% lower sales YoY.

- Valuation and risks: We cut our FY22-23 earnings estimates by 1-3%; modelling revenue / EBITDA CAGR of 10 / 22 (%) over FY20-23E. Retain ADD with DCF-based target price unchanged at Rs500. Key downside risks include sustained weak consumer sentiment impacting restaurant throughput and food aggregators impacting economics and profitability in food delivery.

Shares of WESTLIFE DEVELOPMENT LTD. was last trading in BSE at Rs.456.4 as compared to the previous close of Rs. 472.55. The total number of shares traded during the day was 20761 in over 1365 trades.

The stock hit an intraday high of Rs. 477.35 and intraday low of 446. The net turnover during the day was Rs. 9580202.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Easy Trip Planners Ltd. - IPO - Strong Financials - Reliance Securities

Bharat Forge - Initiating Coverage - Constant evolution - HDFC Securities

Mahindra Logistics - Large-ticket deal win - ICICI Securities

Company Update - Huhtamaki India - ICICI Direct

Gladiator Stocks: IndusInd Bank, VIP Industries - ICICI Direct

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Q4CY20 Company Update - Mahindra CIE Automotive - ICICI Direct

Event Update - Hindalco - ICICI Direct

EY report launch at BioAsia 2021 - Moving the needle: Healthcare industry in a post-COVID world

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020