Target: ₹847

CMP: ₹683.10

We increase EPS estimates (1 per cent/3.4 per cent FY23/FY24 and introduce FY25 EPS estimates) and increase our DCF based target price to ₹847 (₹Rs 781 earlier).

Our recent management interaction reinforced our positive stance on the company given Plans to add 35-40 stores in FY23 and 200 stores by FY26; Strong innovation pipeline across Burgers and Chicken; Probability of staggered increase in royalty (4 per cent in FY23, 4.5 per cent in FY24, 5 per cent in FY25/26) beyond FY26; sustained success of launches like Gourmet Burgers & Meals and Fried Chicken; and strong start to new stores in tier2/3 with sales at par with older stores.

Growth momentum remains strong on the back of sustained growth in Dine-in and Convenience channel (2x pre-COVID levels), positive response to Fried Chicken pilot in West (5-10 stores in Mumbai) and traction in Gourmet Burgers & Meal options.

We believe input cost pressures have peaked out and 5 per cent price increase from May22 will aid margin expansion in coming quarters. We estimate Sales CAGR of 27.3 per cent over FY22-25 with an EPS of ₹8.3/₹11.5 in FY23/24 and we introduce FY25 EPS at ₹15.

Although WDL has gained 70 per cent from May 22 lows, long term prospects remain positive. Retain Buy.