Shares of McDonald's operator Westlife Foodworld surged over 9 per cent in intra-day deals on Friday, September 27 following an upgrade by brokerage house Goldman Sachs, which raised its recommendation to 'buy' with a target price of ₹1,075. This target implies a potential upside of 22.6 per cent from the stock’s previous closing price.
Goldman Sachs highlighted the launch of the McCrispy platform as a major driver for Westlife’s recovery. According to the brokerage, this marked the first significant addition to McDonald’s core burger lineup in over a decade, with the last being the introduction of the McSpicy range in 2011.
The McCrispy platform includes premium offerings such as the McCrispy Chicken Burger and Crispy Veggie Burger across West and South India, and Crispy Fried Chicken in the Southern region. These items are positioned at the higher end of the menu, aligning with McDonald’s global focus on expanding its chicken category, which Goldman Sachs views as beneficial for Westlife.
The brokerage also forecasted that Westlife's same-store sales growth (SSSG) would begin recovering in the second half of FY25, supported by a soft base from the previous year. Looking ahead, it expects high single-digit SSSG from FY26, further strengthening the company's performance outlook.
The QSR stock climbed as much as 9.1 per cent to its day's high of ₹956.65. The stock is now just 2 per cent away from its record high of ₹975.65, hit in October last year. Meanwhile, the stock has advanced over 36 per cent from its 52-week low of ₹701.05, recorded in March this year.
The upgrade and positive outlook caused a surge in trading volume, with over 1.5 million shares of Westlife changing hands across the BSE and NSE on September 27, far exceeding the one-month average of 100,000 shares.
The midcap stock has shed almost 10 per cent in the last one year and over 17 per cent year-to-date (YTD). It has jumped 13 per cent in September so far after two straight months of losses. The calendar year so far has been extremely volatile for the stock.
Westlife Foodworld, which operates nearly 400 McDonald’s restaurants across 62 cities in West and South India, including Maharashtra, Karnataka, Telangana, Gujarat, and Tamil Nadu, has faced challenges in recent quarters. In its first-quarter FY24 results, the company reported a significant decline in profit due to weak demand and rising costs. Consolidated profit after tax for the quarter ending June 30 fell by 89 per cent year-on-year to ₹3.25 crore. Same-store sales also dropped by 6.7 per cent during the quarter.
Westlife’s operating expenses increased by around 7 per cent to ₹617 crore, driven by higher royalty costs, though the company did not provide further details. Revenue from operations remained flat at ₹616 crore. Chairperson Amit Jatia noted that the first quarter's results reflected the ongoing challenges in the current operating environment.
Despite these near-term setbacks, Goldman Sachs expressed confidence in Westlife’s recovery potential, particularly with the support of new product launches and a focused growth strategy.
