Neutral Westlife Foodworld; target of Rs 600: Motilal Oswal

What happened

Westlife Foodworld reported 16% year-on-year revenue growth to INR7.6b in 2QFY27, in line with expectations and its strongest growth in 13 quarters. Same-store sales growth, which means sales at stores open a year or more, was 10.1% year-on-year.

Confirmed

Global impact / market context

Faster sales at existing stores can spread fixed costs such as rent and staff over more revenue, helping profit per sale. Motilal Oswal still rates the stock Neutral, so the analyst sees the current share price as broadly fair rather than cheap.

Analyst inference

The analyst expects regional demand to improve gradually, which would support a gradual recovery in average daily sales, or ADS, the average revenue each store makes per day. The Rs 600 target price uses 25 times a future EV/EBITDA multiple, a valuation measure explained below.

Analyst inference

What to watch

1. Management said October momentum was similar to the second quarter, with high-single-digit same-store sales growth described as the floor for the festive season. Confirmed
2. Motilal Oswal proposes a target price of Rs 600, based on 25 times a future EV/EBITDA before IND AS, which means a pre-accounting-standard earnings measure. Proposed
3. If regional demand improves and average daily sales recover as the analyst expects, store revenue and cost absorption could rise; if not, the Neutral rating and target may come under pressure. Analyst inference

Evidence

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