Buy Jubilant FoodWorks; target of Rs 3630: Motilal Oswal

Motilal Oswal's research report on Jubilant FoodWorks

While Jubilant FoodWorks (JUBI)'s sales were broadly in line with our expectations, margins surprised positively. The management believes the QSR business in India is at a significant inflection point. In line with this, the company has not only increased its store expansion guidance (150-175 stores from 135 earlier) but also announced investments to boost the supply chain. Moreover, in an interesting new thrust, it has shown intent to gradually become a food tech company. On the technology front, JUBI is significantly expanding its customer experience, analytics, and product innovation teams. The personalization of purchases and identifying triggers for buying in various customer segments would be important growth areas.

Outlook

Given the structural opportunities in the QSR space and JUBI's dominant positioning with proven and profitable model, we expect JUBI to be the key beneficiary of favorable trends (shift towards branded players). Thus, we upgrade the rating to Buy with TP of INR3,630 (60x Sep’23 EPS).