Jubilant FoodWorks share worth surged 5% on Friday morning, a day after the corporate reported its July-September quarter earnings. Jubilant FoodWorks, that operates the well-known Domino’s Pizza and Dunkin’ Donuts restaurant chains, reported a standalone internet revenue of Rs 76.9 crore final quarter, up from Rs 75.9 crore recorded in the identical interval final 12 months. Jubilant mentioned its whole earnings was Rs 836 crore through the quarter, towards Rs 1,005 crore within the 12 months in the past interval. The sturdy restoration posted by Jubilant FoodWorks has been lauded by analysts. Jubilant FoodWorks’ shares are at present buying and selling at Rs 2,483 per share, an all-time excessive for the inventory.
“Jubilant FoodWorks’ headline financials had been modest within the context of a tricky surroundings with spectacular restoration and better-than-expected operational efficiency,” mentioned Axis Capital in a word. The coronavirus pandemic and the resultant lockdown has taken a toll on enterprise however Jubilant FoodWorks has up to now stood its floor. The gross margin enlargement was aided by benign uncooked materials costs, efficiencies in commodity procurement, decrease reductions and supply costs. “FY22/23 EPS estimates up 5-6%; larger for FY21E at ~14% resulting from superior margin profile. Retain ADD with revised TP of Rs 2,550 based mostly on 53x Sept-22E,” Axis Capital mentioned.
Through the quarter, Jubilant FoodWorks opened 10 new Domino’s shops and closed 100 unprofitable shops, taking the whole depend to 1,264 shops. Jubilant FoodWorks plans to open 100 new Domino’s shops this fiscal 12 months, most of which might be modern, supply centric shops. The administration highlighted that the majority the shops had been operational besides shops on the company parks throughout the nation. Domino’s Pizza and Dunkin’ Donuts had been seeing higher restoration coming from smaller cities.
Pandemic aids structural modifications
Analysts at Kotak Securities anticipate the quick meals main to come back out of the pandemic stronger than earlier than. Among the many key causes that support their view embody, weak dine-in demand could drive out 10-15% of eating places provide with focus extra on supply, trusted manufacturers comparable to Domino’s would acquire share from darkish/cloud kitchens as confidence in meals security will affect shopper preferences. “Total, we consider that JUBI has remodeled right into a leaner execution engine. The template/ platform is in place to step up addition of latest format Domino’s shops and scale up new manufacturers/cuisines,” Kotak Securities added. With an ‘ADD’ score Kotak Securities has a good worth of Rs 2,700 for Jubilant FoodWorks.
Jubilant FoodWorks has been the largest success story within the Indian QSR trade when it comes to development with its delivery-based enterprise mannequin. It affords the best margin and greatest return-ratios amongst friends, in response to brokerage agency Motilal Oswal. “The introduction of supply costs (with none damaging suggestions on scores) and closure of 105 least worthwhile shops are components driving structural margin enchancment,” they added. The brokerage agency believes that valuations of 61.3x FY22E totally seize the upside from a one-year perspective. With a ‘Impartial’ score, Motilal Oswal has a goal worth of Rs 2,415 per share on Jubilant FoodWorks.