ICICI Securities Maintains Reduce Rating for Westlife Foodworld, Targets Rs 450

Westlife Foodworld Faces Challenges in Demand Recovery

ICICI Securities has released a research report highlighting the ongoing challenges faced by Westlife Foodworld in terms of demand recovery. Despite strong store expansion and execution, the company's earnings quality remains under pressure due to a lack of depth in demand recovery. The report notes that guest counts and dine-in trends have improved, but growth is largely driven by affordability-led initiatives and network expansion, with same-store sales growth (SSSG) remaining modest at 1.5%.

Management's focus on value, omnichannel integration, and faster store additions is expected to support revenue growth in the future. However, the report warns that elevated competitive intensity, continued investments behind growth, and a fragile consumption environment may slow down margin expansion. Positive trends are emerging in operating metrics, with South markets showing early signs of recovery.

Valuations Ahead of Underlying Earnings Recovery

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The research report concludes that valuations for Westlife Foodworld appear ahead of the pace of underlying earnings recovery. As a result, ICICI Securities has maintained its previous recommendation to REDUCE the stock. The report also maintains its estimates and model revenue/EBITDA compound annual growth rate (CAGR) of 12/19% over the FY26-28E period.

Recommendation and Target Price

The target price for Westlife Foodworld has been revised to INR 450 based on a discounted cash flow (DCF) analysis, down from the previous target price of INR 430. The report highlights upside risk in the form of a faster-than-anticipated recovery in the demand environment.