Westlife Development's (WDL) topline was lower than our estimates for the quarter. It is comforting to see that WDL is back to 65-70% of sales of pre-Covid (Feb'20) levels with convenience channels (delivery, drive-thru and On-The-Go) reaching pre-COVID levels and dine-in showing showed healthy recovery trend across markets. Maharashtra which is the biggest market for WDL (50% of sales) has now allowed to start dine-in from Oct'20. For 2QFY21, WDL's topline declined by 47.2% YoY to Rs2.1bn (est. 36% decline to Rs2.54bn) as SSSG declined by 47% YoY excluding stores which were shut during the quarter. Gross margin contracted 180bps YoY to 63.5% (+670bps QoQ; vs est. 63.5%). Gross margins are back to pre-Covid levels on account of volume recovery, higher average check...

Near-term uncertain; Medium term vision stays strong Westlife Development (WLDL) continued to deliver an encouraging performance in 4QFY20 till Feb'2020 (SSSG for Jan-Feb'2020 stood at 12.3% with sales growing by 20.3% YoY) but was impacted by Covid related lockdown in March. WLDL's 4QFY20 topline declined by 0.9% YoY to Rs3.4bn (est. 6.5% growth to Rs3.6bn) as SSSG declined by 6.9% YoY (est. flat SSSG). Gross margin expanded by 210bps to 65.6% (est. 66%). High employee cost as a % of sales (+190bps YoY) along with increase in other expenses as a % of sales (up 250bps YoY) led to EBITDA margin sharply contracting by 230bps YoY to 5.5% (est. +120bps to...

Westlife Development (WLDL) has released an update on the impact of COVD-19 on its business. The impact of the lockdown on 4QFY20 is higher than what we had estimated in our preview note. While WLDL actually did well in Jan and Feb'2020, witnessing 12.3% YoY SSSG (it is to be noted that 4QFY20 has a slightly softer base of 5.6% compared to previous quarters), the blanket restaurant closures done as a result of lockdowns announced by the State and the Central Governments at the end of March quarter led to SSSG declining 6.9% YoY for the full quarter (est. flat SSSG). This has led to net sales declining by...

We met Mr. Amit Jatia, Vice-Chairman, Westlife Development (WLDL) recently and Sector: Quick Service Restaurant the meeting reinforced our positive view on the medium term prospects for the CMP: Rs462 company. Key highlights from our interaction are as follows: Focus on value platform and menu innovations: The all-new McSaver combo campaign has kept the value platform buzzing. The combo was launched at Rs59 and as a part of this campaign it offered more than 50 combos of burgers with beverages at compelling price points. Value has been a big part of eating-out/snacking and thus the launch has helped improve the company's baseline sales. Along with this, the company...

Westlife Development (WLDL) continued to deliver an encouraging performance in 3QFY20 amid challenging demand environment. It delivered a topline growth of 16.8% YoY to Rs4.3bn for the quarter, which was around 2% above our expectations. The company has now delivered 18th consecutive quarter of positive Same Store Sales Growth (SSSG). The growth was led by strong SSSG of 9.2% (versus our estimate of 8.5%). 3QFY20 traditionally has been a critical quarter for the company. It leveraged the festive season and strengthened the value platform with the introduction of all new McSaver combo at compelling price points, which helped improve baseline sales. WLDL added 11 new restaurants during the quarter (number of...

India) to get an idea of current demand trends and impact of increasing competition and cloud kitchens on its growth plans. WLDL remains positive on its demand positioning given 1) value offerings in Menu 2) McCafe scale up 3) EOTF stores and 4) rising traction of Mcdelivery. Although rising penetration of cloud kitchens and food delivery options can impact delivery based formats, their focus on dine in sales insulates them significantly. We are positive on WLDL as strategies like 1) brand extension through McCaf 2) continuous menu innovations and 3) new age stores to improve...

Annual store expansion to be 25-30 stores with Experience of The Future (EOTF) the key focus: Management highlighted that it targets to add 25-30 stores annually (no change in plans amidst slowdown) with focus on expanding in existing core cities.

The topline performance of Westlife Development (WDLD) in 1QFY20 was fairly within expectation, growing at 11.8% YoY. The growth in topline was on the back of SSG of 6.7% YoY, which marks the 16th consecutive quarter of positive SSG growth. WDLD has delivered well on its strategic initiatives and management is confident that SSG of 7-9% is sustainable in the current scenario. Excluding the impact of IndAS116, EBITDA was Rs305.2mn and witnessed a decline of 10% YoY. The weakness in EBITDA despite a healthy top-line growth can be explained by the fact that the company invested significantly in A&P; in the quarter, frontloading the marketing plan. Gross margin excluding the impact of IndAS 116 was 64.3%, expanding by 30bps YoY, which was...

Westlife Developments (WLDL) revenue growth in 4QFY19 witnessed a moderation relative to its strong trend in the previous quarters. Top-line growth for the quarter stood at 12% and was below our estimate by 4%. The growth in marketing expenditure has witnessed a moderation following efforts by the management, but it was offset by the steep increase in employee costs during the quarter. Despite the lower-than-anticipated top-line growth and higher employee costs, the company managed to deliver a healthy EBITDA growth of 35%. Although same-store sales growth or SSG has significantly trailed expectations in 4QFY19, WLDL has delivered well on its strategic initiatives and therefore we feel confident that SSG can post an improvement in FY20FY21. The several strategic initiatives where the company has impressed us significantly in FY19...

Westlife Development (WDL) continued to demonstrate an encouraging performance in 3QFY19 and is also making good progress towards its medium term Vision 2022 plan. The much-awaited clarification on royalty rate was made during the quarter which is positive and lends an upside of 10%-15% to medium-term earnings. Considering that our estimates were towards the higher end of consensus estimates, we envisage a similar or possibly higher upward revision by consensus. In 3QFY19, the company launched several new customer initiatives which supported healthy same-store sales growth or SSG of 15% YoY, despite a fairly high base. Top-line growth for the quarter was 22% and was around 4% above expectation. Operating earnings growth of 40%...

Westlife Development (WLDL) reported another strong quarter of same-store sales growth or SSG in 2QFY19, beating overall revenue expectations. Revenues grew 32% YoY led by strong SSG of 25.7% during the quarter. This was the fourth consecutive quarter of above 20% SSG for WLDL. Revenue growth was a function of improved performance of brand extensions namely, McCafe and McDelivery, introduction of a new rice platform and overall higher footfalls because of existing as well as new consumers. WLDL ran a strong marketing campaign for rice bowls during the quarter which resulted in greater-than-expected media spending. However, the management indicated that over the next quarter the advertising intensity will normalise. Strong performance...

Westlife Development (WLDL) through its 100% subsidiary, Hardcastle Restaurants Pvt. Ltd, owns and operates a chain of McDonald's restaurants in west and south India, being a master franchisee of McDonald's Corporation, USA. The management's focus on valuefor-money proposition, menu innovation and efforts in improving consumer experience has helped the brand to sail through a challenging environment in the past. Burger Plus' is the differentiating factor for WLDL and has really helped in recruiting new consumers and driving frequency of eating out. Our extensive ground research activity indicates that WLDL's robust platform strategy covering all day parts and encouraging consumption trends would help its same stores sales growth (SSG) to remain in double digits. WLDL...

Near-perfect; positive surprise on both revenue and margin Westlife's 1QFY19 earnings report is a testimony that the business is well-placed to deliver the targets that management had set for itself, viz. 7-9% comps every year and doubling of margin by 2022 (see our earlier report for details). The near double-digit margin delivery during the quarter (9.9% - up 431bps YoY) was a positive surprise to us, led by a more favourable demand environment, the successful revamp of its value platform and further scale-up of brand extensions that helped drive a 30% growth in revenue and more-thandoubling of EBITDA. We expect this strength to sustain in the coming quarters - earnings growth trajectory would accordingly remain strong and could help drive further stock...

Westlife Development Limited(WDL) is 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. Hardcastle Restaurants Pvt. Ltd. (HRPL) is a McDonald's franchisee with rights to own and operate McDonald's restaurants in India's west and south markets. HRPL has been a franchisee in this part of India since its inception in 1996. The...

We see Westlife to benefit from its continued focus on innovation and improving customer experience in anticipation of an eventual uptick in consumer sentiment. We estimate 17% sales growth over FY17-22E on high-single digit SSSg.

Westlife Development (WDL) posted improved performance with 4% samestore sales growth or SSG and 11.7% overall sales growth, although FY17 was a challenging year for the overall quick service restaurant or QSR industry. The company rejuvenated the customer- facing part of its business with the objective of enhancing footfalls. It witnessed increase in...

We had an interaction with the management of Westlife Development (WDL) recently. Following are the key takeaways: Industry potential is significant: The management indicated that Informal Eating Out (IEO) market in India is worth US$120bn, growing at 7%-8% per annum of which Indian fast food and Western fast food (IFF and WFF) account for 18% i.e. around US$21bn. YUM Brands, Domino's, Burger King and McDonalds are key players in the fast food segment who together account for less than 10% of the fast food market. These numbers explain the growth potential in this space....

Q1 sales grew 14% YoY with SSSg at 8.7% the highest in past four years. Gross margin was stable at 60.1%, but EBITDA margin improved 90 bps YoY at 5.6%, as higher staff costs (up 90 bps YoY) were more than offset by operational efficiencies (increasing restaurants under ROP2.0 platform)

Q4 sales grew 7.5% YoY.SSSg grew modest 1% YoY on lower footfalls at high street and mallsdue to an early end to EoSS. Gross margin improved 40bps YoY to 61.3% but EBITDA margin declined 60bps YoY on higher staff costs (up 140bps YoY).

We had an opportunity to visit the new stores run by Westlife Development or WDL under Project Ray - Experience of the Future' and also interacted with the management of the company at the investor conference held by us recently. Following are the key takeaways: Project Ray could boost same-store sales growth (SSG) in the medium term: McDonalds, similar to its peers overseas, has embarked on an ambitious new restaurant project in India named Project Ray. The project involves launching a new restaurant format called Experience of the Future (EOTF)'. This restaurant...