Broker’s call: Buy Westlife Development
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Updated on
CMP: ₹507.35
Our bullish investment thesis on Westlife Development rests on three pillars: superior unit economics — 30-40 per cent higher revenue per store than peers; supported by value pricing and strategies aimed at increasing in-store visits; and offering complementing menus. Its recent initiatives on digital could provide a further fillip; comparison with Domino’s highlights a 3x store roll-out potential, offering a long visibility into penetration-led growth. We expect mid-teen revenue growth for several years with an upside risk; and our relative analysis of a peer at a similar scale throws a strong case for a 500 bps upside in EBDITA margins. Higher unit economics should lead to industry-leading ROEs as high upfront overheads get more corralled with scale. The pandemic has already reset the cost curve lower, commensurate with a 20 per cent lower revenue.