WFL’s Q2 FY25 Financial Performance

Here is a summary of the key figures reported:

• Total Revenue: ₹618.48 crores
• Sales Growth (YoY): 0.6%
• Gross Profit: ₹431.08 crores
• Restaurant Operating Margin (ROM): ₹114.97 crores

Key Observations:

• The total revenue for Q2 FY25 shows a marginal year-over-year increase, indicating slow but steady growth.
• The gross profit remains relatively stable compared to the same quarter last year.
• The Restaurant Operating Margin (ROM) stands at ₹114.97 crores, showing profitability at the operational level.

Weaknesses:

• Continued Negative SSSG: Despite improvement, Q2 FY25 SSSG remained negative at -6.5%, indicating ongoing challenges in fully recovering to pre-pandemic same-store sales.
• Impact of External Issues: External community-related issues continued to impact some stores, affecting on-premise sales in specific locations. While WFL is actively addressing these issues, their extended duration presents a potential risk.
• Exposure to Macroeconomic Factors: WFL acknowledges the impact of macroeconomic factors, particularly higher inflation and subdued consumer spending, on its business.

Quality of Earnings:

• WFL’s gross margin and cost optimization efforts suggest no relative improvement in earnings quality.
• The continuing negative SSSG and the effect of external issues on on-premise sales raise questions about the sustainability of earnings growth.
• Overall, WFL’s Q2 FY25 results reflect a mixed performance.

Disclaimer: Invested and Biased. Less than 4% of PF. No transactions in the last 30 days. Post purely for study purposes. Consult your advisor before any transactions

Discl: Not invested, tracking. post for educational purposes only.

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QIP placement initiated at Rs.154.31 per share (with a potential 5% discount). Not sure if they plan to raise the full Rs.400 crore that was approved, nothing mentioned in the filing here. https://www.bseindia.com/xml-data/corpfiling/AttachLive/ac63fb11-0298-4449-b740-fbc6d119e341.pdf

Results have continued to underwhelm over the past year with no change in debt situation as their cash flows have not supported debt reduction in any way so far. I am not sure if they plan to use these funds to reduce debt. Anyone knows?

Debt aside, valuation is reasonable and moderate textile tailwinds seem to be there. Guess this quarter’s result may indicate if they are benefiting.

Hello
Request if the link can be shared here , as the Google access might not be avb for a lot of us.
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