Buy Westlife Development, target price Rs 650: Emkay Global Financial Services

Emkay Global Financial Services has buy call on Westlife Development Ltd. with a target price of Rs 650.0. The current market price of Westlife Development Ltd. is Rs 455.9 Time period given by analyst is year when Westlife Development Ltd. price can reach defined target.

Westlife Development Ltd., incorporated in the year 1982, is a Mid Cap company (having a market cap of Rs 4940.14 Crore) operating in Tourism & Hospitality sector.

Westlife Development Ltd. key Products/Revenue Segments include Income From Sale Of Share & Securities for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 468.18 Crore, down -2.68 % from last quarter Total Income of Rs 481.10 Crore and up 29.74 % from last year same quarter Total Income of Rs 360.87 Crore. Company has reported net profit after tax of Rs 15.32 Crore in latest quarter.

Investment Rationale:
WLDL reported ~27% growth in revenues, led by 23% SSG and new store additions (up 7% to 326 stores). Compared toQ4FY20, revenue growth was ~35%, led by a complete recovery in the dine-in channel and doubling of convenience sales (48% mix now vs. 32% in Q4FY20). WLDL highlighted that the addition of gourmet burgers/fried chicken has premiumized its portfolio and improved its offerings in the meals category of the Indian informal eating out (IEO) market, while it already has leadership positions in the snack/late-night categories.

Upon the full reopening, WLDL has the potential to offer a relatively higher upside, led by incremental contributions from convenience and full dine-in recovery, in our view. While gourmet burgers have been rolled out to the entire network, fried chicken is currently in the southern market with few pilots in the western region. Store additions were robust with 10 net additions in Q4. WLDL expects35-40 store additions in FY23E and 200+ store additions in the next 3-4 years.

Promoter/FII Holdings
Promoters held 56.98 per cent stake in the company as of 31-Mar-2022, while FIIs owned 9.94 per cent, DIIs 22.84 per cent.