Goldman Sachs upgraded Westlife Foodworld Ltd (WLDL:IN) from Neutral to Buy, increasing the price target to INR1,075 from INR820. The firm anticipates a recovery for the company in the second half of the fiscal year 2025, coupled with a long-term growth trajectory that surpasses its peers. The upgrade is based on the potential impact of a new product launch and enhanced value offerings that are expected to drive a rebound in same-store sales growth (SSSG) starting in the latter half of FY25.
The analyst from Goldman Sachs highlighted that Westlife Foodworld has a softer base in the second half of FY25 due to one-off issues, which positions it well for recovery. The company's successful introduction of new categories in its existing restaurants and its ability to cater to multiple day-parts were cited as key factors contributing to its long growth runway within the quick-service restaurant (QSR) sector.
Goldman Sachs has revised its EBITDA (pre-Ind AS 116) estimates for the fiscal years 2026 and 2027 upwards by 1.5% and 3.6%, respectively. This revision is based on the sales recovery led by SSSG. The firm projects a sales compound annual growth rate (CAGR) of 13% and an EBITDA (pre-Ind AS 116) CAGR of 22% for Westlife Foodworld from FY24 through FY27.
The valuation of Westlife Foodworld has been set at a target enterprise value to EBITDA (EV/EBITDA) multiple of 38 times, up from the previous multiple of 32 times. This valuation represents a roughly 25% discount to the average of the firm's India consumer discretionary coverage, maintaining the same sector discount as before. In comparison, Jubilant's India business is currently trading at an implied EV/EBITDA of 44 times FY26 estimates.
The analyst concluded that as Westlife Foodworld's operational performance improves, its valuation should begin to align closer with the broader sector. With the revised price target of INR1,075 and the upgrade to a Buy rating, Goldman Sachs forecasts approximately 20% upside for the stock.
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