Jubilant Foodworks fair value at Rs 160 plus: Udayan

Excerpts from Bazaar on CNBC-TV18 Watch the full show » Jubilant Food BSE | NSE 10/02/12 Are Mutual Funds betting on Jubilant Food?

Jubilant Foodworks listed on the exchanges today with a premium. CNBC-TV18's Managing Editor Udayan Mukherjee, commenting on the company, said, "The prospects look good for the company. For FY11, the company will do Rs 500 crore on sales. The profit after tax would be Rs 50 crore on that sales and EBITDA would be much higher."

"The fair value seems to be Rs 160 plus, which gives Rs 1,000 crore of market cap to the stock. So it left Rs 15-20 on the table for investors despite stretched pricing."

Here is a verbatim transcript of Udayan Mukherjee's comments on CNBC-TV18. Also see the accompanying video.

Market conditions are slightly mix, so the propensity would be or the inclination would be to take profits where there are. I think there will be profits on Jubilant on listing. So, at least high net worth individuals (HNI) crowd will rush to protect profits as soon as they see some gains and that might work against the stock. However, it got very well subscribed. It was not terribly cheap but the prospects of the business are pretty good and it's quite easy to see Jubilant doing more than 500 crore. This current quarter they have hit a revenue run rate of about Rs 110-112 crore.

Next year, FY11, they will do more than Rs 500 crore in terms of sales and they should have at least Rs 50 crore profit after tax (PAT) on the back of that and EBITDA will be much higher. At Rs 160 per share, which is Rs 15 higher than the price of Rs 145 where the issue was done, at Rs 160 Jubilant gets a marketcap of about Rs 1,000 crore.

Would a business which is generating Rs 500 crore of topline and 50 crore of bottomline in a space which is demographically driven and therefore considered exciting and attractive would trade at two times revenues and 20 kind of PE multiple? I think yes.

I do not know about the market conditions. If markets slide over the next one week then Jubilant too will be scarred but fair value should be more than Rs 150 in my eyes for Jubilant. Do not know about the first day but at least Rs 15-20 they left on the table despite optically stretched pricing.