CLSA initiates coverage on Westlife Development with 'buy'

MUMBAI: Global brokerage firm CLSA has initiated coverage on Westlife Development with a 'buy' rating and a target price of Rs 300 and said that a pick up in consumer sentiment will drive strong growth in the company's earnings.

On Friday, shares of the company ended up 0.1% at 209.75 on the BSE.

Westlife is the master franchisee of McDonald's for west and south India with a network of 252 stores.

"We believe that consumer sentiment is at a trough in urban India and a pick-up will drive a strong 60%+ Ebitda Cagr over FY17-20, building in 8% annual SSG with 11%+ Ebitda margin by FY20. Also, we believe that McDonald’s will extend its support to WDL by raising royalty in a phased manner," said CLSA in a note today.

The brokerage firm said that the Indian food service restaurant provides a multi-year growth opportunity amid rising disposable income, growing middle class and more women joining the work force. It expects the share of chained restaurants to rise from the current 3%.