Westlife Q3 net Profit Jumps Over Threefold

Westlife Development – the owner of the master franchisee of McDonald’s restaurants in West and South India – reported a strong operational performance in the October-December quarter of the financial year 2019-20 (Q3FY20).

Investor frenzy on the counter following the earnings release lifted the Westlife share price by 18% to Rs 452, not far from its 52-week high level of Rs 454 hit on March 15, 2019. It hit an all-time high of Rs 464 in May 2018.

Westlife reported over three-fold jump in consolidated net profit after tax at Rs 22.72 crore in the third quarter ended December 2019. The company had posted a consolidated net profit of Rs 6.92 crore in the year-ago quarter.

Total revenue during the third quarter stood at Rs 432.93 crore as compared to Rs 370.66 crore in the same period last fiscal, up 16.8%.

Westlifes’ strategy centered on customer experience, digitisation and maximising efficiencies has provided momentum and helped it to deliver consistent results.

McCafe, McDelivery and McBreakfast, has created more occasions to drive increased brand usage across all days-parts.

The initiative ensured the company stays the course of growth despite a challenging economic environment, slower-than-expected GDP growth, and tepid consumer sentiment.

The company posted a positive SSSG performance for 18th quarter in a row wherein Q3 FY20 company SSSG stood at 9.2% across 315 restaurants with 11 new additions during the quarter with an overall presence in 42 cities

The company has further strengthened the value platform through M cSaver combo campaign having launched 11 new restaurants and 13 new McCafes, taking the total count to 315 and 218 respectively

The new Maharastra policy allowing select food malls and food outlets to remain open 24×7 will also play positively on the company’s business going ahead although it is difficult to analyze what would be the incremental value of business coming in in these late hours.

Net net we believe that Westlife is a clear play on the consumption theme and despite challenging macro headwinds the company has done well on account of its stringent cost control measures and adding more innovations to its product line which has helped it grow at a healthy rate ahead.

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